New Labor Rules Are Reason for Risk Assessment

by RaeAnne Marsh


The National Labor Relations Board has, historically, focused on the unionized part of the National Labor Relations Act, but the act has always covered non-unionized employees as well — and this is where the current NLRB is especially focused. The NLRA’s “mutual aid and protection” component is what the NLRB is using to greatly expand its realm of authority. According to Joe Clees, a shareholder with Ogletree Deakins and a past chair of the Employment and Labor Law Section of the Arizona State Bar, the NLRB’s point is, employees have the right to engage in protected concerted activity. And many seemingly neutral and benign policies that employers have had for years may now be determined to violate employees’ rights — even if they have never been used to terminate or discipline anyone. For instance, negative statements by employees about their supervisor cannot be subject to discipline, even if they contain vulgarities, because employees have the right to complain about workplace conditions.

Notes Steve Wheeless, a partner with Steptoe & Johnson and the management chair of the American Bar Association’s Developing Labor Law Committee, there are two primary areas that affect virtually all employers. One is human resources policies and procedures, both written and tacitly understood, affecting practices in investigations, solicitation, and civility and at-will policies. “For instance, if an employer says, ‘We’re conducting an investigation and want to keep it confidential, so the investigation is not undermined by gossip,’ the labor board says you can’t do that,” Wheeless says. Nor can a company limit solicitation or distribution of literature, as the labor board sees this as improperly restricting employees’ right to solicit or distribute union literature. “There’s a whole host of what many employers view as standard handbook policies this board has challenged, many successfully,” Wheeless says.

Clees suggests employers review employee handbooks and all written policies to ensure nothing blatantly violates employee rights, review job descriptions to determine who is and isn’t a supervisor (supervisors are not protected by the NLRA), and train their supervisors in appropriate workplace behaviors.

Also important is for employers to make sure their decisions on discipline and discharge issues are reasoned, fair, just and defensible – which, Wheeless observes, “is hard to put into practice in busy workplaces.” He suggests employers ensure their discipline and discharge decisions comply with the seven tests for industrial due process known as “just cause” that have been used for seven to eight decades. “It would behoove employers of any size to get educated on those seven tests and apply them to their work practices.”

The NLRB has also greatly expanded the view of what the employer relationship means, and lowered the standards for determining when the primary employer is the legal employer, Wheeless says. This affects independent contractors, of which there are three types of relationships: the franchisor/franchisee model, temporary leased employees and independently contracted employees. Noting the primary employer may be responsible for what goes on the third-party employer, Wheeless says, “As a primary employer, you cannot turn a willful blind eye to what’s going on with your independent contractors; you may well be their joint employer.” Therefore, businesses need to be cognizant of what the third-party employer is doing with his employees and take steps to ensure compliance with Federal labor laws.

Notes Clees, “All federal agencies share information more than they used to.” So an employee who goes to one federal agency that may not be able to secure a remedy is often referred to another agency to pursue a claim.

Recent years have also seen an escalation in class-wide claims. Says Clees, “Increasingly, the regulators are asking to see all employer policies or employer’s treatment of wide groups of employees, so these single-claimant charges are evolving into full-fledged, often company-wide, investigations by the regulators.”

Pointing out that there are many state and federal agencies to which employees can take their grievances, Clees says, “It’s far better to fix a problem in the workplace so employees do not feel compelled to reach outside their employment to fix the problems.” And he adds, “Even union organizers say they are not, typically, called in until an employer does something wrong.”

Other elements of the new NLRB rules were covered in the August issue of In Business Magazine.

Joe-CleesJoe Clees, a shareholder with Ogletree Deakins, represents employers throughout the nation in employment litigation and labor relations. He has been honored a “Phoenix Lawyer of the Year” for Employment Law/Management by Best Lawyers and named to HR Executive Magazine’s “100 Most Powerful Employment Lawyers in America.”


Steven-WheelessSteve Wheeless is a partner in Steptoe & Johnson LLP’s Phoenix office who represents clients nationwide in labor and employment matters. He serves as the management chair of the American Bar Association’s Developing Labor Law Committee. Honors include recognitions in Chambers USA and Southwest Super Lawyers.


Editor’s Note:

In a ruling on January 20, 2016, the U.S. Supreme Court held that businesses cannot stop a class-action lawsuit by offering to pay the full amount sought by the original plaintiff. Ryan Mick, a partner at law firm Dorsey & Whitney with a focus on employment issues, explains the potential implications: “Companies who could potentially face cases in a variety of fields involving allegations of minor violations and small damages to individual customers, employees or others, but affecting large numbers of people, may have lost an opportunity to head off potentially massive class cases by offering to satisfy the alleged damages of the usually small number of individuals who may step forward to raise such claims.”

Noting, “Companies should redouble their compliance efforts to identify and eliminate what might appear to be minor compliance issues, particularly if applicable statutes or regulations specify even small damages, penalties or fines for individual violations,” Mick says, “Employers should consult legal counsel to discuss other options to limit their risk, such as class action waivers or arbitration.”

(The Supreme Court, in its 6-3 decision, sided against advertising firm Campbell Ewald that was trying to avoid a class-action lawsuit.)

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