National Labor Relations Board Archives

Old Standard, New Challenges: The NLRB Restores ‘Clear and Unmistakable Waiver’ Standard

The National Labor Relations Board issued its decision in Endurance Environmental Solutions, LLC, 373 NLRB No. 141 (2024), in which it announced a major precedential shift: a return to the “clear and unmistakable waiver” standard. This shift may make it more difficult for employers to make changes to employee working conditions without union approval.

This decision overturns the NLRB’s 2019 decision in MV Transportation, Inc., 368 NLRB No. 66 (2019), in which the NLRB jettisoned the long-standing “clear and unmistakable waiver” standard in favor of the more employer-friendly “contract-coverage” standard. Under the latter rule, an employer could make changes to workplace conditions–without engaging in collective bargaining–as long as those changes generally aligned with the management-rights clause of a collective bargaining agreement, even if the disputed employer action was not mentioned specifically in the contract’s text.

With the Environmental Solutions decision, however, the NLRB has flipped again and resurrected the old clear and unmistakable waiver standard, which had been in place from 1949 until 2019.

While the clear and unmistakable waiver rule might be familiar territory, an old standard can raise new challenges for employers.

Under this more stringent and labor-friendly standard, an employer may only make a unilateral change to workplace conditions if there is clear and unmistakable language in the collective bargaining agreement permitting the proposed action. In other words, an employer is now required to demonstrate that a union has given a “clear and unmistakable waiver” of its right to bargain over specific changes being implemented for its unilateral change to survive NLRB review.

The NLRB champions its return to this standard as one that better accomplishes the goals of the National Labor Relations Act: to promote industrial peace by “encouraging the practice and procedure of collective bargaining.” The NLRB touts this decision as more consistent with U.S. Supreme Court and NLRB precedent.

Employers negotiating collective bargaining agreements should carefully evaluate their management-rights provisions and consider whether those provisions are now insufficient to enable them to implement unilateral changes without bargaining.

Notably, with the upcoming change in presidential administrations, the effect of Environmental Solutions, LLC may be ephemeral. If (or when) the NLRB comprises a Republican majority, we may be in store for another seismic shift as the NLRB looks for more employer-friendly opportunities, like a potential return to the contract-coverage standard.

Today, the Board issued its decision in Endurance Environmental Solutions, LLC. and restored the “clear and unmistakable” waiver standard for evaluating employers’ contractual defenses to allegations that they have unlawfully changed the working conditions of union-represented employees without first giving the union notice and an opportunity to bargain.

www.nlrb.gov/…

NLRB General Counsel Takes Issue with “Stay-or-Pay” Employment Provisions

On October 7, 2024, the General Counsel (GC) for the National Labor Relations Board (NLRB) issued a 17-page memorandum urging the NLRB to find so-called “stay-or-pay” provisions unlawful and to impose harsh monetary penalties on employers that use such provisions.

On October 15, 2024, the U.S. Department of Labor (DOL) similarly announced that it will combat stay-or-pay clauses, among other provisions in employment agreements that the DOL describes as “coercive.”

What is a “stay-or-pay” provision?

A stay-or-pay provision is a requirement that an employee pay their employer for certain expenditures made for the employee’s benefit if the employee separates from employment within a specified period of time. Examples include training repayment agreement provisions (sometimes referred to as “TRAPs”), and provisions requiring employees to repay signing bonuses, moving expenses, or tuition reimbursement.

Why does the NLRB GC take issue with such provisions?

The GC’s latest memorandum is essentially an addendum to her prior memorandum criticizing non-compete covenants. In her view, stay-or-pay provisions violate the National Labor Relations Act (NLRA) because, as she interprets them, they are akin to non-compete covenants that unlawfully restrict employees from changing jobs.

We don’t have union employees. Does the NLRA even apply to our business?

Yes. Under Section 7 of the NLRA, employees in both unionized and nonunionized workforces have the right to join together in an effort to improve the terms and conditions of their employment. Specifically, Section 7 grants employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, or to refrain from any and all such activities.” Although certain types of workers, such as managers, supervisors, and independent contractors, are not entitled to such rights, Section 7 of the NLRA otherwise applies to all workers – whether unionized or not.

Do I really need to be concerned about the NLRB GC’s memorandum, and is it legally binding on my business?

The memorandum does not carry the force of a statute or regulation or case law. And it’s not even the stance of the NLRB. It’s essentially the NLRB GC’s guidance for the stance she is encouraging the NLRB to take with respect to these types of provisions.

That said, the memorandum is getting a lot of publicity in the press and online, which means employees who have heard about it may become skeptical about the enforceability and/or legality of their stay-or-pay provisions. This, in turn, may embolden employees to make a move, as they may be less fearful of their repayment obligations.

Will the NLRB GC’s memorandum apply prospectively, or will it also apply retroactively?

If the NLRB adopts the GC’s view, then yes, the memorandum would apply both to agreements entered into in the future, as well as to agreements already signed by employees and former employees. However, it affords employers a 60-day period from the date of the memorandum to “cure” any pre-existing stay-or-pay provisions before facing potential prosecution.

What are the potential consequences for my business if the NLRB adopts the GC’s view?

The GC expects employers to make employees whole, which may mean rescinding or rewriting the agreement or reimbursing former employees for sums repaid pursuant to their agreements. She goes further and suggests that an employer must compensate an employee if the employee can demonstrate that “(1) there was a vacancy available for a job with a better compensation package; (2) they were qualified for the job; and (3) they were discouraged from applying for or accepting the job because of the stay-or-pay provision.”

Is there any way the stay-or-pay provisions used by my business aren’t objectionable?

According to the GC, a stay-or-pay provision is reasonable if (a) it is entered into voluntarily in exchange for a benefit to the employee (as opposed to, for example, being a condition of employment), (b) the repayment amount is reasonable and specific, (c) the “stay” period is reasonable, and (d) it does not require repayment if the employee is terminated without cause.

We do use stay-or-pay provisions in our business. What should we do now?

Your course of action depends on your appetite for risk. At a minimum, we encourage you to consult with your company’s legal counsel to discuss the full import of the memorandum, risks, and options for your business, as there are a lot more details and nuances in those 17 pages than we can summarize here.

Going forward, some employers might consider alternatives to stay-or-pay provisions, such as stay bonuses (e.g., instead of paying a signing bonus and requiring recoupment if an employee leaves within two years following their date of hire, condition payment of the bonus on the employee staying for a period of two years.) Of course, the hitch with this approach is that it may impact the enforceability of non-compete or non-solicitation covenants in states that require up-front consideration to impose such covenants for at-will employees.

Notably, the GC’s 60-day moratorium takes us to December 6, which is a full month following Election Day. By now, employers are familiar with the makeup of the NLRB changing depending on the party occupying the White House, and if there is a shift in political power come November, that may result in a newly constituted NLRB with new policy preferences. With that in mind, some employers may opt to use a wait-and-see approach before making any changes – whether to existing agreements or retention strategies going forward.

Sixth Circuit Explicitly Sidesteps the NLRB’s McLaren Macomb Decision

The Sixth Circuit Court of Appeals recently declined to comment on the National Labor Relations Board’s (the “Board”) McLaren Macomb decision which took aim at overbroad non-disparagement and non-disclosure agreements.

We first reported in February 2023, on the significant decision by the Board in McLaren Macomb, 372 NLRB No. 58 (Feb. 21, 2023), which concluded, among other things, that proffering a severance agreement with broad confidentiality and non-disparagement provisions could violate Section 7 of the National Labor Relations Act (“NLRA”) – a decision and rationale we wrote about in depth here. The decision drove employers to reevaluate existing severance agreements with such provisions.

On appeal, the Sixth Circuit sidestepped the most salient aspects of the Board’s McLaren Macomb decision, namely those portions addressing the lawfulness of confidentiality and non-disparagement provisions in severance agreements, writing, “we do not address [the Board’s] decision to reverse Baylor [Univ. Med. Ctr., 369 NLRB No. 43 (2020)] and IGT[, 370 NLRB No. 50 (Nov. 4, 2020)], or whether it correctly interpreted the NLRA in doing so.” In other words, the Sixth Circuit did not offer any insight or pass judgment one way or another on the Board’s ruling that broad-based non-disparagement and confidentiality provisions are unlawful under NLRA. Indeed, while the Sixth Circuit did find the specific severance agreements at issue unlawful, it did so under previous Board precedent (not for the reasons articulated in McLaren Macomb), further reinforcing the Court’s unwillingness to address this critical issue directly.

What does this mean for employers? While there is lingering uncertainty for employers, it reinforces, at least for now, that the Board may continue to find severance agreements offered to non-supervisory employees that include broad-based confidentiality and non-disparagement provisions as unlawful. Consequently, employers should continue to review their existing severance agreements with the assistance of employment counsel to determine whether, when, and to what extent they may include appropriately crafted non-disparagement and confidentiality clauses.

DOJ, FTC, DOL, and NLRB Join Forces and Announce Memorandum of Understanding on Labor Issues in Merger Investigations

On August 28, the US Department of Justice (DOJ) Antitrust Division, which enforces the US antitrust laws including the Sherman Act and Clayton Act, and the Federal Trade Commission (FTC), which enforces the Federal Trade Commission Act and other laws and regulations prohibiting unfair methods of competition (together, Antitrust Agencies), along with the US Department of Labor (DOL) and National Labor Relations Board (NLRB) (together, Labor Agencies), announced that they entered into a Memorandum of Understanding on Labor Issues in Merger Investigations (MOU).

The MOU took effect on August 28 and expires in five years, unless it is extended or terminated upon written agreement of each of the agencies.

Purpose of the MOU

The MOU outlines a collaborative initiative between the signatory agencies to assist the Antitrust Agencies with labor issues that may arise during the course of antitrust merger and acquisition (M&A) investigations, commenced under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). The HSR requires that parties to certain large M&As provide information to the Antitrust Agencies prior to the transaction’s consummation, which allows these agencies to analyze the anticipated transaction(s) and provide greater certainty to the parties regarding potential antitrust concerns.

From a labor perspective, these investigations may aim to evaluate whether the effect of a merger or acquisition could substantially lessen competition for labor. The stated goal of this MOU is to protect employees and promote fair competition in labor markets. Specifically, the MOU outlines methods by which the Labor Agencies may aid or advise the Antitrust Agencies on potential labor issues identified during the course of these evaluations. These methods include the following.

1. Labor Information Sharing

The MOU outlines various ways in which the Antitrust Agencies may work with the Labor Agencies to gather information used to evaluate potential impacts of M&As on labor markets. These include:

Soliciting information from relevant worker stakeholders and organizations.
Seeking the production of information and data with respect to labor markets.
Searching publicly available sources of information made available by the Labor Agencies.
Seeking production of non-public information and data related to labor markets from the Labor Agencies.

2. Providing Training and Technical Assistance

Labor Agencies agree to provide technical assistance and training to personnel from the Antitrust Agencies related to subject matter under their jurisdictions. For example, the NLRB will train personnel from Antitrust Agencies on labor-related issues such as the duty to bargain in good faith, successor bargaining obligations, and unfair labor practices. Additionally, the Antitrust Agencies may seek technical assistance on labor and employment law matters in merger reviews, including in the resolution of labor market merger investigations.

3. Collaborative Meetings

The Labor Agencies and Antitrust Agencies will seek to meeting biannually to discuss the implementation and coordination of activities outlined in the MOU.

This MOU expands upon collaborative efforts amongst the agencies and builds upon several MOUs executed in 2022 and 2023. MOUs between the DOJ and DOL, DOJ and NLRB, DOL and FTC, and FTC and NLRB all indicate that the purpose and scope of the agreements are to “strengthen the Agencies’ partnership through greater coordination in information sharing, coordinated investigations and enforcement activity, training, education, and outreach.”

Takeaways

This multi-agency agreement further emphasizes the current administration’s focus on protecting employees from alleged unfair methods of competition. This MOU is further evidence that antitrust regulators are looking at antitrust enforcement from a new perspective. Traditionally, Antitrust Agencies evaluated proposed M&As to identify potential risks of harm to consumers through the reduction of options or increased prices. Now, Antitrust Agencies appear to have turned their focus towards anticompetitive behaviors that may harm employees.

Employers interested or involved in an M&A deal should conduct thorough internal reviews to ensure compliance with both labor-related and fair competition laws. In the event of a review by the DOJ or FTC, employers should partner with experienced labor and employment lawyers to navigate through these investigations.

Full Steam Ahead: NLRB Top Lawyer Signals Continued Focus On Injunction Actions

Last month, the U.S. Supreme Court issued a decision in Starbucks v. McKinney clarifying the standards courts must use when evaluating requests by the National Labor Relations Board (NLRB) for injunctive relief under Section 10(j) of the National Labor Relations Act (NLRA). Many view this as, at least in some jurisdictions, heightening the standard the agency must meet in these cases.

NLRB General Counsel Jennifer Abruzzo issued a memo on July 16 noting this ruling will not affect how her office views Section 10(j) cases. According to the press release, “General Counsel Jennifer Abruzzo reaffirmed her commitment to seeking Section 10(j) injunctions after the Supreme Court’s recent decision in Starbucks Corp. v. McKinney, which set a uniform four-part test applicable to all Section 10(j) injunction petitions.”

The statement then goes on to note, “General Counsel Abruzzo explained that, while the Supreme Court’s decision in Starbucks Corp. provides a uniform standard to be applied in all Section 10(j) injunctions nationwide, adoption of this standard will not have a significant impact on the Agency’s Section 10(j) program as the Agency has ample experience litigating injunctions under that standard and has a high rate of success in obtaining injunctions under the four-part test — a success rate equivalent to or higher than the success rate in circuit courts that applied the two-part test.”

Employers should take note, as the NLRB does indeed have a high success rate when seeking these injunctions against employers. For example, in fiscal year 2020, the agency prevailed in every 10(j) case it brought. These actions can be costly from a time and resources perspective for companies, as they are then forced to defend against alleged labor violations before both the NLRB and in federal court simultaneously.

Accordingly, while the recent Supreme Court ruling did offer a uniform standard and clarity around the legal framework for 10(j) cases, it appears this won’t cause a dip in the amount of such matters the NLRB brings.

U.S. Supreme Court Raises Standard for Labor Board When Seeking 10(j) Injunctions

The U.S. Supreme Court issued a decision directing district courts to use the traditional four-part test when evaluating whether a preliminary injunction should issue at the request of the National Labor Relations Board pending litigation of a complaint under the National Labor Relations Act. No. 23-367 (June 13, 2024).

The decision settles the split among the federal circuit courts over the standard that should be applied when the Board files a motion for a “10(j)” injunction, named for the section of the Act that authorizes the Board to seek injunctive relief. Circuit courts were split on which test should apply: the traditional four-part test, a more lenient two-part test, or a hybrid of the two.

The Court’s decision raises the bar for the Board, requiring it to meet each prong of the four-part test for a court to grant an injunction. In particular, it will be more difficult for the Board to establish it is “likely to succeed on the merits,” as opposed to the more lenient standard espoused by the Board that “there is reasonable cause to believe that unfair labor practices have occurred.”

The Court vacated and remanded the case to the U.S. Court of Appeals for the Sixth Circuit to reevaluate the merits of the injunction request under the four-part test.

10(j) Injunctions

Section 10(j) of the Act allows the Board to seek preliminary injunctions before federal district courts against both employers and unions to stop alleged unfair labor practices during the pendency of the Board’s administrative processing of an unfair labor practice charge. Section 10(j) authorizes a district court “to grant to the Board such temporary relief … as it deems just and proper.”

The requests are rare; the Board has sought only 20 such injunctions since 2023, according to the Board’s website. Nonetheless, the standard a court will use in evaluating the injunction request has been determinative of whether the relief was granted.

Prior Standards

The U.S. Court of Appeals for the Sixth Circuit, as in this case, used a two-part test to assess whether the Board was entitled to an injunction. The two-part test examined whether “there is reasonable cause to believe that unfair labor practices have occurred,” and “whether injunctive relief is ‘just and proper.’” McKinney v. Ozburn-Hessey Logistics, LLC, 875 F.3d 333 (2017). The Supreme Court noted in its latest decision that the Board could establish reasonable cause “by simply showing that its ‘legal theory [was] substantial and not frivolous.’”

Conversely, other courts, such as the U.S. Court of Appeals for the Seventh and Eighth Circuits applied the four-part test used for preliminary injunctions in traditional litigation settings set forth in Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008). Under the Winter framework, a party seeking injunctive relief must “make a clear showing” that:

He is likely to succeed on the merits;
He is likely to suffer irreparable harm in the absence of preliminary relief;
The balance of equities tips in his favor; and
An injunction is in the public interest.

New Standard for Labor Board

In holding that the four-part test applies to 10(j) injunction requests by the Board, the Court declined to allow Section 10(j) language “to supplant the traditional equitable principles governing injunctions.” Rather, courts should apply standard principles involved in granting injunctive relief, not 10(j)’s “discretion-inviting directive.”

The Court explained that the reasonable-cause standard in the two-part test “goes far beyond simply fine tuning the traditional criteria to the Section 10(j) context—it substantively lowers the bar for securing a preliminary injunction by requiring courts to yield to the Board’s preliminary view of the facts, law, and equities.” It noted there is a substantial difference between the “likely”-to-succeed-on-the-merits standard versus a finding that the charge was “substantial and not frivolous.” Under the “less exacting” standard, courts could evaluate injunction requests giving significant deference to the Board under even a “minimally plausible legal theory” without assessing conflicting facts or questions of law.

Accordingly, the Board must satisfy the traditional standard that requires it to make a clear showing it is likely to succeed on the merits of the claim under a valid theory of liability.

The Court’s decision to standardize 10(j) injunction requests not only raises the Board’s burden of proof, but it creates more consistency across district courts at a time employers increasingly face injunction requests by an activist Board general counsel.

Supreme Court Weakens NLRB’s Ability to Obtain Injunctions in Labor Cases

On June 13, 2024, the Supreme Court of the United States held that courts must assess requests for an injunction by the National Labor Relations Board (NLRB) using the traditional four-factor test for preliminary injunctions. The ruling weakens the Board’s ability to obtain quick court orders to maintain the “status quo” in favor of workers in pending labor cases.

Quick Hits

The Supreme Court held that federal courts must apply the traditional four-factor equitable test for preliminary injunctions when considering the NLRB’s request for a 10(j) injunction.
The ruling found the NRLA does not require courts to defer to the NLRB’s initial findings of a labor violation.
The ruling weakens the NLRB’s ability to quickly stop employer actions it alleges are unfair labor practices.

The Supreme Court held that when considering temporary injunction requests under Section 10(j) of the National Labor Relations Act (NLRA), courts must apply the traditional equitable four factors as set forth in the high court’s 2008 decision in Winter v. Natural Resources Defense Council, Inc. The decision means that courts must consider 10(j) injunction requests under the same equitable principles that they do for other preliminary injunctions without deferring to the NLRB’s determination that an unfair labor practice had occurred.

The unanimous decision comes in a labor dispute in which the trial court issued a preliminary injunction against an employer after applying a two-part test that only asked whether “there is reasonable cause to believe that unfair labor practices have occurred” and whether an injunction is “just and proper.” The injunction was later affirmed by the Sixth Circuit Court of Appeals.

The NLRA prohibits employers from engaging in certain unfair labor practices and allows workers to file a charge with the NLRB. The NLRA provides the NLRB with authority to seek a temporary injunction in federal court and Section 10(j) states that courts may “grant the Board such temporary relief … as it deems just and proper.”

However, the Supreme Court held that the NRLA does not strip courts of their equitable powers, and they must apply the traditional four-factor rule as articulated in Winter when considering a request for a 10(j) injunction. Under that rule, a plaintiff must show “he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

The Supreme Court rejected the NLRB’s argument that Section 10(j) informs the application of equitable principles and that courts should use a “reasonable cause” standard as applied by the Sixth Circuit in the case. The NLRB had pointed to the context that Congress has given it the authority to adjudicate unfair labor practice charges in the first instance and that courts must give deference to the NLRB’s final decisions.

Justice Clarence Thomas, in the Court’s opinion, stated that the reasonable cause standard “substantively lowers the bar for securing a preliminary injunction by requiring courts to yield to the Board’s preliminary view of the facts, law, and equities.” Justice Thomas stated the fact that the NLRB is the body that will adjudicate unfair labor practice charges on the merits does not mean courts must defer to what amounts to be the NLRB’s initial litigating position. Section 10(j) “does not compel this watered-down approach to equity,” Justice Thomas stated.

In a partial dissent, Justice Ketanji Brown Jackson agreed that the NRLA does not strip courts of their equitable powers and that the injunction in the case should be overturned. However, Justice Jackson argued the Court should not ignore the fact that Congress, through the NRLA, granted the NLRB authority over labor disputes.

Key Takeaways

The Supreme Court’s ruling raises the bar for the NLRB to seek injunctions by requiring courts to make their own assessment of the equitable factors for issuing preliminary injunctions without deference to the NLRB’s initial findings that an unfair labor practice has occurred. Under the reasonable cause standard, the NLRB merely had to show that its legal theory was not frivolous and that an injunction was necessary to protect the “status quo” pending the NLRB’s proceedings. That standard had allowed the NLRB to quickly put a stop to employer actions that its in-house attorneys believe are labor violations during the pendency of an administrative proceeding on the merits, which could take years to resolve.

Top Five Labor Law Developments for April 2024

Volkswagen employees at a Chattanooga, Tennessee, facility voted to join the United Auto Workers (UAW). The workers voted 2,628 to 985 to join the UAW. The union has been focusing its organizing efforts at foreign automakers with U.S. facilities following successes with the “Big Three” automakers last year. The UAW won record-breaking pay increases for those workers. Those successes likely increased momentum at Volkswagen. According to a UAW press release, the Volkswagen workers are the first Southern autoworkers outside the Big Three to win a union election. The UAW plans to continue its push to organize at other non-union car manufacturers across the country.
The National Labor Relations Board’s General Counsel (GC) Jennifer Abruzzo issued a memorandum instructing Board Regional Offices to seek enhanced remedies for unlawful work rules or contract terms. Memorandum GC 24-04 (Apr. 8, 2024). While the GC noted progress in achieving make-whole relief relating to back pay for employees “discharged for engaging in union or other protected concerted activity,” she stated such relief must be expanded to include all employees harmed as a result of an unlawful work rule or contract term — such as in an employment or severance agreement — “regardless of whether those employees are identified during the course of the unfair labor practice investigation.” The GC asserted that “mere rescission” of the rule or term does not provide adequate relief. Rather, discipline must be expunged or retracted to make impacted employees whole. Accordingly, Regions should seek settlements for make-whole relief where the discipline or legal enforcement action stemming from an unlawful rule or term “targets employee conduct that ‘touches the concerns animating Section 7,’ unless the employer can show that the conduct actually interfered with the employer’s operations and it was that interference, and not reliance on the unlawful rule or term, that led to the employer’s action.” Regions should seek and obtain information from employers regarding which employees were impacted with discipline or legal enforcement action..
The Board reported significant increases in union election petitions and unfair labor practice charges. According to a Board press release, union activity is still on the rise, with both unfair labor practice charges and election petitions increasing at the highest levels in decades. In the first six months of fiscal year (FY) 2024 (which began Oct. 1, 2023), the Board noted a 7% increase in unfair labor practice charges compared to the same period last year. Union election petitions increased 35%, from 1,199 in the first six months of FY2023 to 1,618 during the same period in FY2024. RM petitions by employers have particularly skyrocketed — accounting for 281 of filed petitions — due to the Board’s new framework for when an employer needs to file an RM petition after receiving a demand for union recognition..
The Department of Labor’s final rule for Occupational Safety and Health Administration (OSHA) inspections raises unionization concerns for employers. The rule aims to clarify (but it instead expands) the rights of employees to authorize third-party representatives to accompany an OSHA compliance safety and health officer during a workplace inspection. As a result, however, the rule seemingly allows a third-party union representative during an organizing campaign to report a safety concern to OSHA and then gain direct access to an employer’s workplace during the inspection that follows. This would give union organizers unprecedented access and broaden unions’ access rights to employer property. The rule is scheduled to take effect on May 31, 2024.
Law360 reported that the College Basketball Players Association filed an unfair labor practice charge against the University of Notre Dame regarding classification of college athletes. University of Notre Dame, 25-CA-340413 (Apr. 18, 2024). The charge alleges Notre Dame violated the National Labor Relations Act “by classifying college athletes as ‘student-athletes.’” The charge follows the Board GC’s 2021 memorandum, Memorandum GC 21-08, in which she stated her position that student-athletes at private universities are “employees” under the Act because they perform services for their colleges and the National Collegiate Athletic Association in return for compensation and are subject to their respective college’s control. The Board has yet to rule on the issue.

Federal Court Strikes Down NLRB Joint Employer Rule

On March 8, 2024, just days before it was set to take effect, U.S. District Judge J. Campbell Barker of the Eastern District of Texas vacated the National Labor Relations Board’s (“NLRB’s”) recent rule on determining the standard for joint-employer status.

The NLRB issued the rule on October 26, 2023. It established a seven-factor analysis, under a two-step test, for determining joint employer status. Under the new standard, an entity may be considered a joint employer if each entity has an employment relationship with the same group of employees and the entities share or codetermine one or more of the employees’ essential terms and conditions of employment which are defined exclusively as:

Wages, benefits and other compensation;
Hours of working and scheduling;
The assignment of duties to be performed;
The supervision of the performance of duties;
Work rules and directions governing the manner, means and methods of the performance of duties and grounds for discipline;
The tenure of employment, including hiring and discharge; and
Working conditions related to the safety and health of employees.

Set to take effect on March 11, 2024, the NLRB’s decision would have rescinded the 2020 final rule which considered just the direct and immediate control one company exerts over the essential terms and conditions of employment of workers directly employed by another firm. The new rule would have expanded the types of control over job terms and conditions that can trigger a joint employer finding.

In the lawsuit, filed by the United States Chamber of Commerce and a coalition of business groups, the Chamber and coalition claimed that the NLRB’s rule is unlawful and should be struck down because it is arbitrary and capricious. Judge Barker agreed as he held that the NLRB’s new test is unlawfully broad because an entity could be deemed a joint employer simply by having the right to exercise indirect control over one essential term. Judge Barker faulted the design of the two-step test which says an entity must qualify as a common-law employer and must have control over at least one job term of the workers at issue to be considered a joint employer, finding that the test’s second part is always met whenever the first step is satisfied. The Court vacated the new standard and indicated it will issue a final judgment declaring the rule is unlawful.

The NLRB quickly responded to the Court’s ruling. In a statement on March 9, 2024 NLRB Chairman Lauren McFerran said the “District Court’s decision to vacate the Board’s rule is a disappointing setback but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts.” According to the NLRB, the “Agency is reviewing the decision and actively considering next steps in this case.”

What Employers Need to Know

The legality of the NLRB’s joint-employer standard has been a contested issue since the October 2023 announcement. The rule will not go into effect as scheduled, but Judge Barker’s decision is unlikely to be the final word on the matter.

It’s Protected: NLRB Finds “Black Lives Matter” Insignia on Employee Uniform Constitutes Protected Activity Under Circumstances

The National Labor Relations Board (“NLRB”), in a 3-1 decision, held that an employee’s display on their work uniform of “BLM,” an acronym for Black Lives Matter, constituted protected concerted activity under Section 7 of the National Labor Relations Act (“Act”). Accordingly, the NLRB reversed an Administrative Law Judge (“ALJ”) decision, and found that the employer (Home Depot) violated Section 8(a)(1) of the Act by directing the employee to remove the BLM insignia because it violated the company’s uniform policy. The employee resigned instead of removing the insignia from their uniform.

Procedural History

In June 2022, an ALJ found that the employer did not violate the Act by requiring the employee to remove the BLM messaging, because the insignia lacked “an objective, and sufficiently direct, relationship to terms and conditions of employment.” The ALJ concluded that the BLM messaging was “primarily used, and generally understood, to address the unjustified killings of Black individuals by law enforcement and vigilantes … [and] while a matter of profound societal importance, is not directly relevant to the terms, conditions, or lot of Home Depot’s employees as employees.” (emphasis in original).

Further, the ALJ determined that the employee’s motivation for displaying the BLM message (i.e., their dissatisfaction with their treatment as employees) was not relevant. The petitioner sought review before the NLRB.

NLRB Finds Wearing BLM Insignia at Work Constitutes Protected Activity

On review, the NLRB concluded that the employee’s refusal to remove the BLM insignia was protected concerted activity under Section 7 of the Act because the activity was for “mutual aid or protection,” as it was a “logical outgrowth” of the employee’s and other employees’ complaints about race discrimination in the workplace that allegedly occurred over the preceding months.

According to the NLRB, an individual employee’s actions are a “logical outgrowth” of the concerns expressed by the group where “the record shows the existence of a group complaint,” even though “the employees acted individually and without coordination.” In this case, the fact that the group complaints post-dated the employee’s initial display of the BLM insignia was not dispositive. Instead, and contrary to the ALJ’s conclusion, the NLRB focused on whether the employee’s subsequent refusal to remove the BLM insignia was a “logical outgrowth” of the prior protected concerted activity.

Additionally, the NLRB found that no special circumstances existed, such that there was a sufficient justification for the company to preclude their employees from wearing such insignia. For instance, this was not a situation where display of the insignia might jeopardize employee safety, exacerbate employee dissention, or unreasonably interfere with the company’s public image. In this regard, the NLRB concluded that the company’s public image was not at issue because it encourages employees to customize their uniforms. Likewise, the NLRB held that the company failed to put forth evidence of any non-speculative imminent risks to employee safety from the public and/or any violent or disruptive acts or threats thereof by other employees connected to the BLM insignia.

The NLRB ordered the employer to, among other things, (1) cease and desist from prohibiting employees from taking part in “protected concerted activities,” such as displaying “Black Lives Matter” insignia on their uniform aprons; (2) reinstate the employee without prejudice and compensate him for lost back pay and any adverse tax consequences; and (3) post notice of the decision for 60 days at the store where the dispute arose. The company may still appeal the Board’s decision to a federal appeals court.

Significantly, the NLRB declined to adopt a broader objective advanced by the NLRB General Counsel that protesting civil rights issues on the job is “inherently concerted” activity that is protected by Section 7 of the Act. The fact-intensive reasoning behind the NLRB’s decision here reflects that the underlying circumstances in each situation will play a significant role in the legal outcome as to whether the conduct at issue is protected, and it is not advisable to adopt a broad, one-size fits all rule from this decision.

Tag: National Labor Relations Board

Old Standard, New Challenges: The NLRB Restores ‘Clear and Unmistakable Waiver’ Standard

Like this:

NLRB General Counsel Takes Issue with “Stay-or-Pay” Employment Provisions

Like this:

Sixth Circuit Explicitly Sidesteps the NLRB’s McLaren Macomb Decision

Like this: