'BFI' and the NLRB's jurisprudence of doubt

"Liberty finds no refuge in a jurisprudence of doubt," the U.S. Supreme Court said in its Planned Parenthood decision, 505 U.S. 833 (1992). "With Cardozo, we recognize that no judicial system could do society's work if it eyed each issue afresh in every case that raised it. See B. Cardozo, The Nature of the Judicial Process 149 (1921). Indeed, the very concept of the rule of law underlying our own Constitution requires such continuity over time that a respect for precedent is, by definition, indispensable."

Who, then, is served by the Obama National Labor Relations Board's repeated introduction of uncertainty when a stable rule had served for years?

Case in point: Since the 1980s, the NLRB had held that an employee with one job can have more than one employer; she could have two (or more) "joint employers." To be joint employers, both entities were required to actually exercise direct and immediate control over significant aspects of the employee's work.

After the board's Aug. 27 decision in Browning Ferris Industries of California, d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186, that control no longer needs to be direct, or immediate, or even actual. It can be a mere right of control buried in a clause in the contract between the two employers, never exercised, unknown to any employee or any supervisor of either employer.

The case arose at a BFI subsidiary in California. BFI owned a recycling plant. It leased workers from another company, Leadpoint, to perform manual functions such as cleaning and sorting the material on its recycling line.

Although Leadpoint alone hired, fired, disciplined and paid the employees, and had its own full-time supervisory and HR staffs onsite, BFI did retain the right, under its contract with Leadpoint, to decide directly such operational matters as the speed at which its sorting line would move and the hours it would operate. BFI also had the right to indirectly affect some other working conditions.

The board said that was enough to make BFI a joint employer with Leadpoint, whether or not BFI actually exercised those rights.

In BFI, the board has just junked a rule that had been working for 30 years. That rule had been accepted and followed by the U.S. Courts of Appeals. (E.g., TLI, Inc., 271 NLRB 798 (1984) enfd, 772 F.2d 894 (3d Cir. 1985).)

The board, however, has now removed the predictability that came with that longstanding requirement of direct control, actually exercised. This is particularly puzzling when the board's decision in BFI makes clear that the majority would have found the two employers were joint employers even applying the historical test.

Yet, the board discarded that test and created a new one, though the case before it did not require one. Why would the board do that? And what does it matter?

The second question is easier to answer. It matters because if a subsidiary and a parent company, or a subcontractor and a general contractor, or a franchisee and a franchisor, are found to be joint employers by the NLRB, each can be held responsible for any unfair labor practices found by the board to have been committed by the other. That can be so even without the non-acting employer having had intent or even knowledge of the action found to be unlawful.

Further, each can be obligated to bargain with a union regarding employees' pay and terms of employment. All of the myriad duties and liabilities an employer has under the National Labor Relations Act suddenly apply to both. And each is subject to picketing and strike activity that otherwise would be limited to just one.

So, back to the first question: Why would the board desire such a result? At least two reasons: It will be good for unions' business, and it will be good for the NLRB's business.

That first reason is not altogether new. Making life a little easier for unions is a normal part of what the board does during Democratic administrations, just as making life a little easier for employers is a normal part of what it does during Republican administrations. Congress designed the NLRA to give the board that sort of political sensitivity, and the board has exhibited it to a greater or lesser degree throughout its 80-year history.

During the Reagan and Bush administrations, unions and their advocates howled at the pro-business partisanship of the board's decisions. During the Clinton and Obama administrations, the management side has been similarly outraged by the torrent of pro-union decisions. The fact that the pendulum swings is, in itself, nothing new, even if the extent of the recent swings seems to be extreme.

The second reason does seem new. It is the Obama board's self-sustaining strategy - its "jurisprudence of doubt." How might that be good for the board's business?

The NLRB does not initiate cases on its own; it has to wait for someone to bring a case before it. Looking back over that very same 30 years during which the prior, predictable joint employer rule was in place, a striking trend jumps out. Between 1984 and 2014, the number of contested cases decided by the NLRB each year - the board's annual "business" - declined by more than 83 percent. The same five-member agency that decided 1,429 contested cases in 1984, decided just 240 last year. The board, as a bureaucracy, has been fading from relevance.

Employees and unions can file a case at a regional office of the NLRB and the agency will evaluate it and provide lawyers to prosecute it free of charge; neither the union nor the employee must hire a lawyer to press the claim. The regional offices will not, of course, pay for the employer's lawyer, who will be needed to defend the employer against the board's lawyers. (The vast majority of all board cases are filed by unions and/or employees. The remedies available to employers typically just don't make it worthwhile for them to file with the board.)

So encouraging unions to file cases is good business for the NLRB. And where the rules are uncertain, more cases are filed.

No one can say with confidence after BFI who will and who will not be found to be a joint employer by the NLRB. In BFI and in numerous other cases, the Obama board has extended the reach of the NLRA along new, uncertain borders.

Rules like "You must behave with civility and courtesy at work" may now be deemed unlawful, because an employee "might" misread that to mean he was barred from trying to organize a union, if he ever became interested in doing so.

Likewise, for decades the board consistently required new bargaining units to be composed of a group of employees who shared a community of interest, and fit within the structure of an employer's operations. A union was not permitted to designate a splinter group as a bargaining unit simply because that was the group with which the union had voting support.

The Obama board has abandoned that rule, and the concept of "micro units" was introduced to facilitate union organizing, and perhaps grow the board's caseload.

BFI continues the trend. If the first duty of a politician is to get elected, perhaps the first duty of an adjudicative agency is to get people to file cases for it to decide. Attract more customers; dangle the possibility of a win. In at least one respect, the Obama board may feel employers' pain: Nobody likes to go out of business.


Keith B. Muntyan is a partner at the law firm Morgan, Brown & Joy. He can be contacted at keithmuntyan@morganbrown.com.

Published: Tue, Oct 27, 2015


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