The Court rejected a number of arguments in support of Abood. Notably, the Court dismissed the “risk of free riders.” That means the risk of non-union members utilizing union benefits without paying dues, finding that risk insufficient to overcome First Amendment concerns. The Court reasoned that unions could implement other strategies to cover the cost of grievance or arbitration representation for non-members, thereby eliminating that risk. Finally, the Court expressed little sympathy for any potential financial impact on unions who “have been on notice for years regarding this Court’s misgivings about Abood.”

The decision was not unanimous and Justice Kagan authored the dissent, which was critical of the majority’s failure to recognize the potential economic impact on unions when they are already not funded well enough to carry out their duties.

Public employers should consult with labor counsel to determine the best course of action regarding the impact of the Janus decision and how to handle fair share fees for non-union employees, which have now been found unlawful by the Supreme Court.

Sara Fagnilli is an attorney at Walter | Haverfield who focuses her practice on public law and litigation. She can be reached at sfagnilli@walterhav.com and at 216-928-2958.

The National Labor Relations Board’s recent noteworthy decision to reverse the joint-employer standard will likely impact a variety of industries and businesses nationwide.

That decision centers around the case of Hy-Brand Industrial Contractors, Ltd. On December 14, 2017, the NLRB ruled that two or more entities will be considered joint employers only if there is proof that one entity has actually exercised control over essential employment terms of another entity’s employees. The Hy-Brand standard also requires that this control be direct and immediate, rather than indirect or limited.

The NLRB’s ruling reverses the highly controversial Browning-Ferris standard. In 2015, the case of Browning-Ferris Industries stood the labor and employment world on its head by holding that a company, the company’s contractors and franchisees could all be lumped together and considered a single “joint employer” for purposes of the National Labor Relations Act.

This was true even if the company did not exert overt control over the terms and conditions of employment for a contractor’s or franchisee’s workers. Under Browning-Ferris, the NLRB could determine that a group of separate entities could be considered a joint employer if the primary company had even “indirect control,” or the ability to exert indirect control over the related companies. Why is this important? Under Browning-Ferris, the alleged wrongs of one company could be imputed to other separate companies if it was determined that even “indirect control” could have been exerted. Thus, joint liability could have been imposed upon all entities in a “joint employer” web.

The NLRB’s U-turn move with Hy-Brand is prompting labor and employment lawyers across the country to intently watch how future decisions will be impacted. The most notable case, which has been in active litigation before the NLRB for several years, deals with the fast food giant, McDonald’s, and the extent to which it exerts control over its franchisees. To date, the McDonald’s case has been one of the most costly and intensive cases in the history of the NLRB, including no less than 150 days of testimony. Observers are keenly aware that Hy-Brand may well affect this case and countless more to come.

Max Rieker is an attorney at Walter |Haverfield who focuses his practice on labor and employment law. He can be reached at mrieker@walterhav.com or at 216-928-2972.

On December 14, 2017, the National Labor Relations Board overturned a controversial 13-year precedent and issued a major decision relating to the legality and enforceability of certain employee handbook rules for employers nationwide.

This decision is likely to have far-reaching impact on the employer – employee relationship. With this NLRB action, a major constraint on employers’ ability to promulgate work rules has been significantly rolled back.

In 2004, the NLRB created a test for deciding whether portions of employee handbooks were legal. In Lutheran Heritage Village-Livonia 343 NLRB 646 (2004), the NLRB held that if “employees would reasonably construe” that the language in a work rule restricted the employees from banding together for a collective purpose, then the handbook provision would not be enforceable. This “concerted activity” shield was true for both unionized and non-unionized workplaces.

The “Lutheran Heritage test” was used by the NLRB to strike down many employee handbook provisions over the past several years. Those provisions included rules which prohibited employees from criticizing their employers on social media and rules which prohibited making recordings in the workplace. Shockingly, Lutheran Heritage was even used in a 2016 case to strike down aspirational handbook language which called upon employees to “maintain a positive work environment.”

During that same period, a minority of NLRB members often issued stinging dissents related to these contentious decisions, citing too great of an emphasis on employees’ rights and too little attention to the legitimate needs of employers to manage their workplaces.

On December 14, a 3-2 majority of the NLRB overturned the Lutheran Heritage standard. The vote in The Boeing Company and Society of Professional Engineering Employees in Aerospace, IFPTS Local 2001 was strictly along party lines. The Republican majority found the prior Lutheran Heritage test to be both complicated and onerous on employers.

Now, the NLRB standard for reviewing a challenged employee handbook provision will not be based on the “reasonably construed” language of Lutheran Heritage. Rather, the board will consider the “nature and extent” of the rule’s “potential impact” which may be adverse to employees’ rights under the National Labor Relations Act. Further, the NLRB will consider the “legitimate justifications associated” with the work rule. In other words, the legitimate need of the employer may now take precedence over employees’ right to act in a concerted manner, depending on the language of the work rule, the legitimacy of the employer’s need and the operative facts.

As a good end-of-year practice, and particularly in light of this major NLRB ruling, every employer should undertake the process of reviewing employee handbooks to determine what changes should be made going forward.

For any questions regarding the applicability of the new standard, please contact Max Rieker at 216-928-2972 or mrieker@walterhav.com.

“Fair share” union fees may very well be on their way out in the public sector. On September 28, 2017, the United States Supreme Court agreed to accept the case of Janus v. American Federation of State, County, and Municipal Employees (AFSCME). This case revisits the constitutionality of fair share fees being imposed upon an employee as a condition of employment.

The issue goes back to the seminal 1977 Supreme Court case of Abood v. Detroit Board of Education. In Abood, the unanimous court held that it was lawful for members of a bargaining unit – but who were NOT voluntary members of the applicable labor union – to be assessed a union fee as a condition of employment. The theory in Abood was that it is unjust to require unions to represent a minority of non-paying “free riders” within a bargaining unit who would then reap the benefit of the union negotiating and enforcing their labor contract. By law, unions are required to represent all members of a bargaining unit, including the processing of grievances for those who have not signed union membership cards.

Since Abood, both public sentiment and the opinion of justices have shifted. Many Supreme Court observers predicted that mandatory fair share fees to unions would be abolished with the early 2016 decision in Friedrichs v. California Teachers Association. That decision challenged fair share fees head-on based on First Amendment grounds.

However, the unexpected death of Justice Antonin Scalia a month before the Friedrichs decision was released resulted in a 4-4 deadlock. Therefore, the lower court decision to allow fair share fees was permitted to stand. Half of the justices in Friedrichs would have abolished fair share fees on the grounds that mandating any dues payments equates to mandating a worker’s speech.

Today, laws in 22 states, including Ohio, permit mandatory fair share fee payments from all those covered by a collective bargaining agreement, but who have opted not to join the union. There are currently about 11 million union employees in these 22 states. The other 28 states have “right to work” laws, which expressly prohibit requiring workers to join or financially support a labor union, unless those workers do so of their own volition.

The case now before the Supreme Court involves Mark Janus who is a child support specialist employed by the state of Illinois. He and a small group of others filed suit two years ago based on the same free speech arguments brought forth in Friedrichs. Janus objected to being required to pay $44 per month to AFSCME, which covers approximately 35,000 other state workers.

Many now view Janus v. AFSCME as the final blow to the 40-year-old Abood precedent. It is unlikely that Justices Roberts, Thomas, Alito and Kennedy will have had a change of heart on the same issue in the span of a year. It is highly likely that Justice Neil Gorsuch is poised to be the fifth vote necessary to strike down Abood. The Janus decision is due to be released in summer of 2018.

The practical impact of the likely outcome in Janus may not be felt immediately in the workplace. It has been estimated that as many as 30% of union members will cease paying union dues if the requirement is abolished. Consequently, an abolishment of fair share fee payments will ultimately weaken their ability to conduct business.

Unions are keenly aware of this dynamic. They will likely seek alternatives to existing and upcoming collective bargaining agreements in the short term in an attempt to contractually preserve fair share fees for as long of a period as possible.

Any questions on this topic can be directed to Max Rieker at 216-928-2972 or mrieker@walterhav.com.