United States: Recent National Labor Relations Board Rulings

This article is part of our 2024 Labor & Employment Roundup. To read the other articles, click below:

Recent and Upcoming Legislation Impacting Employers in 2024
Developments in PAGA Litigation

A number of National Labor Relations Board (NLRB) rulings made in 2023 may impact union bargaining, work rules, elections, severance agreements and litigation; employers with unionized employees should familiarize themselves with these changes.

What this means for employers: New NLRB decisions may result in an increase in litigation in some areas, and employers may need to reconsider negotiation practices and work rules. For additional guidance, please contact JMBM's Labor & Employment team.

New "Recognition Test" Lowers the Bar for Bargaining Orders

To the dismay of employers, on November 2, 2023, NLRB General Counsel Jennifer Abruzzo issued a memo indicating that a single unfair labor practice is sufficient to trigger a bargaining order – that is, an official order requiring an employer to bargain, regardless of whether a union prevailed in a Board-administered election.

Union elections are conducted by the NLRB at the request of either a union or an employer. Historically, a union would approach an employer as the self-proclaimed representative of a majority of the employees, demand to bargain, and, if the employer refused, ask the Board to hold an election. If the employer subsequently engaged in election-related misconduct, the Board could hold a rerun election (typically the result when the employer conduct was isolated or less serious), or issue a bargaining order – traditionally reserved for situations involving more egregious employer action.

As a result of the new guidance, there is likely to be an uptick in NLRB litigation; unions now have an incentive to pursue unfair labor practice charges for alleged labor law violations that, in the past, would not have resulted in bargaining orders. This development underscores the importance of effective manager and supervisor training to guard against unintentional violations. Employers are encouraged to work with counsel to review existing training materials and protocols and develop more comprehensive educational outreach where appropriate.

New Standard for Evaluating Allegedly "Facially Unlawful" Employer Work Rules

In another blow to employers, a recent NLRB decision sets forth a new, more stringent framework for evaluating whether a work rule is "facially unlawful." Previously, under Boeing Co. (2017), as refined by LA Specialty Produce Co.(2019), employers were permitted to adopt "overbroad" work rules that could chill employees' exercise of organizing and collective bargaining rights, and certain types of rules were categorically held to be lawful.

Under the new standard adopted in Stericycle Inc. (2023), so long as the General Counsel proves that a challenged rule has a reasonably tendency to chill the exercise of employee rights, the rule is presumptively unlawful, and the employer may rebut that presumption only if it can establish that the rule advances a legitimate and substantial business interest that could not be addressed through a more narrowly-tailored rule. This individualized, case-specific inquiry creates greater uncertainty for employers and is likely to result in increased Board litigation.

Tesla Successfully Appeals NLRB Uniform Ruling

Following years of litigation, the Fifth Circuit Court of Appeals vacated an NLRB decision regarding Tesla's uniform policy.

In 2017, certain Tesla employees began wearing black shirts with the United Auto Workers (UAW) logo rather than company-provided black shirts with the Tesla logo. While the UAW shirts violated Tesla's uniform policy, Tesla allowed the practice for a period of time. When Tesla discovered an increase in damage to vehicles coming out of its assembly line – damage the company-provided shirts were designed to prevent – Tesla began to strictly enforce the uniform policy, leading the UAW to file an unfair labor practice charge alleging that the policy interfered with employee rights to display union insignia.

Applying the "special circumstances" test, which requires employers to justify union insignia restrictions by showing that such restrictions are necessary for production or disciplinary reasons, the NLRB ruled in favor of the UAW. On appeal, however, the Fifth Circuit held that the NLRB's rule was inconsistent with the National Labor Relations Act and failed to appropriately balance Tesla's and the employees' interest, particularly given that the policy at issue restricted only the type of clothing worn by employees – i.e., it was content-neutral and not directed at union insignia.

In reinstating the more flexible test for union insignia restrictions set forth in Wal-Mart Stores, Inc. (2019), the Fifth Circuit's decision may encourage judicial review of certain NLRB decisions.

NLRB Revises Standard on Employers' Duty to Bargain

Consistent with its efforts to unwind its more employer-friendly policies, the NLRB recently restricted employers' ability to make unilateral changes to terms and conditions of work.

On August 26, 2023, the Board issued a pair of decisions overruling Raytheon Network Centric Systems (2017), through which employers enjoyed greater latitude in implementing unilateral changes affecting bargaining unit employees during both initial contract negotiations and negotiations after the expiration of the prior collective bargaining agreement.

In Wendt Corporation, the NLRB reaffirmed that an employer may never rely on "past practices" predating employees' selection of a bargaining representative. In Tecnocap, LLC, the NLRB held that allowing employers to make unilateral changes while bargaining for a new agreement ran afoul of the National Labor Relation Act's (NLRA) "pro-bargaining" policies. Consequently, employers must exercise even greater caution in taking any action impacting bargaining unit employees during negotiations, including conferring with counsel throughout the process.

The Narrowing of the "General Release" – NLRB Reverses 2020 Decisions Regarding Permissible Severance Agreement Provisions

Reversing two 2020 decisions, the NLRB reaffirmed longstanding precedent holding that it is unlawful for employers to offer severance agreements that include a broad waiver of employee rights under the NLRA.

In McLaren Macomb, the NLRB, on February 21, 2023, held that simply asking an employee to sign a severance agreement that requires them to waive their rights under the NLRA is, in and of itself, unlawful. Given the wide range of statutory rights conferred upon employees by the NLRB, employers are encouraged to consult with counsel to ensure severance agreements do not contain impermissible terms, such as non-disparagement clauses and provisions barring employees from disclosing the terms of a severance agreement.

The Return of the NLRB's "Quickie" Election Rules

Effective December 26, 2023, the NLRB will return to the "quickie" election rules initially implemented in 2014, thereby dramatically accelerating pre-election timelines. One particularly significant change is the elimination of the mandatory, 20-business-day waiting period between a Decision & Direction of Election and the election; now, elections must be scheduled for "the earliest date practicable." The new rule also impacts the timing of pre-election hearings, greatly restricts Regional Directors' ability to postpone pre-election hearings and employer position statement deadlines, and time periods for posting a Notice of Petition for Election.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.