While much of Washington's attention centered on President Donald Trump's tax reform, his appointees to the nation's top federal labor arbiter reversed nearly all of the Obama administration's major pro-union initiatives.
The three-member Republican majority at the National Labor Relations Board reversed course on a number of the Obama board's most controversial rulings as Chairman Philip Miscimarra's term ended on Friday.
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The about-face from one of the top federal regulators will have major effects on the workplace heading into 2018. Employers will face a decidedly more pro-business atmosphere on a number of issues from workplace rules to union organizing parameters and liability guidelines for contractors.
The NLRB's decisions, while a major boost for employers, should not be seen through the same prism of other aspects of the president's de-regulation agenda. While Trump has used the power of the pen to advance pipeline expansions and rein in regulators at Environmental Protection Agency, labor policy has largely focused on resetting long-standing precedent that Obama's labor board overturned.
"What the board has now done is restore some of the norms [of labor law]. The radical changes all occurred over the previous eight years," said Rick Grimaldi, a member of the Labor Relations Practice Group at Fisher Phillips.
On Friday evening, the NLRB released a ruling that overturned the Obama board's 2011 Specialty Healthcare decision, which allowed unions to organize micro-units. That decision had been a boon for unions, enabling them to organize segments of a company, rather than force an election to the entire workplace. PCC Structural Inc. challenged this precedent when a union petitioned to organize 100 welders spread across various departments, rather than hold an election among the 2,565 workers employed by the company
"There are sound policy reasons for returning to the traditional community-of-interest standard that the Board has applied throughout most of its history, which permits the Board to evaluate the interests of all employees—both those within and those outside the petitioned-for unit—without regard to whether these groups share an ‘overwhelming’ community of interests," the majority wrote.
Grimaldi and fellow attorneys Lori Armstrong Halber and Todd Lyon represented PCC in the case. Grimaldi said micro-unions have been used "as a Trojan horse to infiltrate an employer and organize from the inside out" over the past seven years. Armstrong Halber said the facts of the case gave the board good reason to revert back to the old standard, in which the NLRB, rather than union organizers, gets to determine a bargaining unit in an election. The welders fell under various departments and supervisors and though they performed similar tasks, they did not operate as a fixed unit.
"This particular plant's manufacturing process is functionally integrated," she said. "All of the production workers [not just welders] have the same terms and conditions of employment."
Lyon said the case represented a correction of overreach from the Democratic majority in 2011. The decision to overturn decades of precedent and take such a loose interpretation of federal law made Specialty Healthcare vulnerable to future boards.
"No other board previously had hinted at [allowing micro-unions]. There was no prior case law that gave that kind of interpretation," he said. "This is just the pendulum shifting back to what at least employers see to be a reasonable approach."
The PCC Structural Inc. decision came just a day after the board voted 3-2 to overturn a controversial 2015 decision holding employers liable for labor violations committed by franchisees or subcontractors. The Obama board threw out decades of precedent that only held the parent company liable if they directly controlled the employment conditions that led to an apparent violation of worker rights.
Michael Lotito, an attorney at Littler Mendelson, called the board decision a shift "of earthquake proportion" and laid the blame on overzealous regulators.
"If you want a fundamental change in statute, what this board is saying is it for Congress to make … not the agencies," he said. "If it hadn't have been for that radical approach for the reversal of decades of established law, we wouldn't have needed the new decision."
While the ruling was a welcome development for the franchise industry, the board also overturned an Obama era policy that affected all employers and could prove the most important development as the Trump administration heads into 2018. The board ruled to rein in agency regulators' ability to police employee handbooks. Beginning in 2013, the agency adopted the view that any rule in a rulebook—regardless of whether it played a part in worker's complaint—could be construed as a violation of federal labor law.
The new scope led to controversial board decisions, including striking down a Hooters franchise policy requiring employees to be polite to co-workers and guests. David Phippen, a management-side attorney at Constangy, Brooks, Smith, & Prophete LLC., said the agency used the rulebook standard to gain leverage on employers and force settlements. He said something as standard as an anti-sexual harassment policy could trigger an NLRB investigation.
"They [Obama's NLRB] just wanted to include more people in the scope of their power, to increase their authority over the workplace," he said. "They were acting like little emperors."
Phippen said the decision to overturn the 2004 decision would keep the board more focused on the specifics of future complaints, rather than going on fishing expeditions to force a settlement. He does not expect such a development to have a chilling effect on workers defending their rights because "there are many ways to engaged in concerted activity while remaining within the scope or employer rules and remaining civil."
Charles Caulkins, an attorney at Fisher Phillips based out of Florida, said the 2013 employee handbook guidance represented an extreme shift even for a partisan agency like the NLRB, which is designed to seat three members of the president's party and two from the opposition. The GOP-controlled board's reversal of so many major accomplishments from the Obama era should give future board members pause before overturning long-lasting precedent.
"I don't think I've ever seen the pendulum swing so far in one direction … I think the NLRB is going to continue to try and pull back some of the more dramatic decisions," he said of the Obama board. "I think all of us—management and union—would agree we want a less political agency."
Miscimarra's term ended on Friday, meaning the agency will revert to a 2-2 split between Democrats and Republicans. The Trump administration has not yet announced an interim chairman, nor its nominee to replace him.