I. Business Owners Must Stay Current on Employment Compliance Obligations
Much of the information a business owner needs to keep current on their employment compliance obligations is available on state and Federal regulatory agency websites. However, business owners frequently have little time to monitor, understand and implement regulatory updates in addition to running a business effectively.
Compliance costs can be expensive. But failure to comply with laws and policies pertaining to employee relations can be more costly, with serious consequences. Risks of non-compliance may include:
- Civil liability.
- Loss of business.
It is important to bear these employment compliance tips in mind when reconstructing your business.
II. Employment Compliance Counsel Is Critical to Keep Your Business Properly Updated and Compliant
Having an attorney with expertise in employment compliance obligations at your fingertips is more important in the current business environment than ever before. Experienced counsel can make sure their clients’ workplace policies are up-to-date, compliant with current law, and obligations are implemented timely.
Recent decisions by the National Labor Relations Board (NLRB) concerning collective bargaining rights have underscored the importance of consulting an experienced employment compliance attorney. These decisions show a clearly divided Board on important employment matters, raising the level of uncertain outcomes in any matter brought before it. These decisions are summarized below.
1. Easier for Employees to Unionize
In a 3-2 decision involving a company called PCC Structurals, Inc., the National Labor Relations Board (NLRB) made it a little easier for employees to unionize by reinstating the traditional “community-of-interest” standard for determining the size of an appropriate bargaining unit. The case was before the NLRB on the employer’s request for review of a Regional Director’s Decision and Direction of Election. The Regional Director found that a petitioned-for unit of approximately 100 welders was appropriate for collective bargaining. He had rejected the employer’s position that the smallest appropriate unit was a wall-to-wall unit of 2,565 employees.
The National Labor Relations Act provides that the NLRB must decide in each case whether the group of employees a union seeks to represent constitutes a unit that is “appropriate” for collective bargaining. Prior to the decision in PCC Structurals, a union had to show that the employees shared a community of interest among themselves. If the employer took the position that the smallest appropriate unit would have had to include employees who had been excluded from the proposed unit, the NLRB would not rule for the union unless the excluded employees shared an “overwhelming” community of interest with the petitioned-for group.
The NLRB in the PCC Structurals decision abandoned the “overwhelming” community-of-interest standard. In its decision, the NLRB stated that “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.”
Expressing no opinion as to whether the petitioned-for unit was appropriate, the NLRB remanded the case for further appropriate action consistent with its order.
2. Duty to Bargain Clarified Concerning Changes to Workplace Policies
In another 3-2 decision, this one involving Raytheon Network Centric Systems, the NLRB issued a ruling affecting bargaining obligations that are required before implementing a unilateral “change” in employment matters. The duty to bargain changes to workplace policies became unclear when a NLRB case decided in 2016 seemed to expand the employer’s duty to bargain to cover virtually any change.
In the Raytheon case, however, consistent with other NLRB cases dating back to 1964, the NLRB held that actions do not constitute a change if they are similar in kind and degree with an established past practice consisting of comparable unilateral actions. The NLRB also held this principle applies regardless of whether (i) a collective bargaining agreement (CBA) was in effect when the past practice was created, and (ii) no CBA existed when the disputed actions were taken. Finally, the NLRB ruled such actions consistent with an established practice do not constitute a change requiring bargaining merely because they may involve some degree of discretion.
In this NLRB ruling, the Board concluded that the employer’s changes to employee healthcare benefits in 2013 were a continuation of Raytheon’s past practice involving similar unilateral changes made at the same time every year from 2001 to 2012. Therefore, the NLRB found the company did not violate the National Labor Relations Act by failing to give its union advance notice and the opportunity for bargaining before making the 2013 changes.
3. New Standard Governing Workplace Policies
In yet another 3-2 decision, this time involving The Boeing Company, the NLRB overruled its prior decision articulating the Board’s standard governing whether facially neutral workplace rules, policies and employee handbook provisions unlawfully interfere with the exercise of rights protected by the National Labor Relations Act (NLRA). One of Boeing’s workplace policies was a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit.
Under the NLRB’s prior standard, employers violated the NLRA by maintaining workplace rules that: 1) do not explicitly prohibit protected activities, 2) were not adopted in response to such activities, and 3) were not applied to restrict such activities, if the rules would be “reasonably construed” by an employee to prohibit the exercise of NLRA rights.
In place of this “reasonably construe” standard, the NLRB in the Boeing case established a new and much more ambiguous standard: when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially (emphasis added) interfere with the exercise of NLRA rights, the NLRB will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.
The NLRB also announced that, prospectively, three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions.
- Category 1 will include rules that the NLRB designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. Examples of Category 1 rules are the no-camera requirement maintained by Boeing, and rules requiring employees to abide by basic standards of civility. Thus, the NLRB overruled past cases in which the NLRB held that employers violated the NLRA by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.
- Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
- Category 3 will include rules that the NLRB will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example would be a rule that prohibits employees from discussing wages or benefits with one another.
Although the maintenance of particular rules may be lawful, the NLRB held that the application of such rules to employees who have engaged in NLRA-protected conduct may violate the Act, depending on the particular circumstances presented in a given case.
Applying the new standard, the NLRB concluded that Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit. The NLRB majority reasoned that the rule potentially affected the exercise of NLRA rights, but that the impact was comparatively slight and outweighed by important justifications, including national security concerns.
4. Joint Employer Liability
In the final 3-2 decision summarized here, the NLRB overruled a prior decision on joint-employer liability. In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.
Accordingly, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship. The NLRB majority concluded that this standard adheres to the common law and is supported by the NLRA’s policy of promoting stability and predictability in bargaining relationships.
Applying this standard, the NLRB affirmed an administrative law judge’s determination that Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. were joint employers and therefore jointly and severally liable for the unlawful discharges of seven striking employees.
III. Employment Compliance Tips with Applicable Employment Laws and Regulations
The first tip is to work with expert employment compliance counsel. A DYI approach is resource-intensive and will likely compound your problems. The volume of material alone is daunting, and understanding exactly what your obligations is not easy, as the few cases summarized above illustrate. Here are a few employment compliance tips to get you on the right track.
1. You Need a Hiring Policy, and You Need to Keep it Updated
At a minimum, it should cover your company’s policies and procedures on matters such as advertising a position, ban the box interview questions, recordkeeping and forms, including withholding tax forms, e-verify, and a myriad of other topics.
If you have a policy already and your employees are unionized, any changes to it may need to comply with the NLRB decisions described above concerning collective bargaining obligations.
2. Comply with Minimum Wage and State Laws on Retirement Plans
At least quarterly, check with the Federal Dept. of Labor and the labor departments of every state in which your business has an office or employee to get the latest on the prevailing minimum wage and overtime rates and retirement benefits. If any changes are applicable to your employees, research whether your business qualifies for any small business exceptions.
3. Monitor Changes to Workplace Safety Standards and Required Posters
Check for updates at least once each quarter with state and Federal regulatory agencies relevant to your business to obtain the latest workplace posters. These may be issued by the Federal and state labor departments, EEOC, or any state or Federal agency that is the primary regulator of your specific business activities. An example of a primary regulator may be a railroad commission, health department, food and drug administrator, or other regulatory agency. Follow their rules for operating the business and posting and placement of any posters.
4. If Your Company Offers a Wellness Program, Comply with the New EEOC Rules on Them
A new EEOC rule effective in 2017 allows employers to provide limited incentives as part of wellness programs that make disability-related inquiries or require medical examinations. Incentives may be financial or in-kind (e.g., time-off awards, prizes, and other items of value). Check with EEOC for updates on implementation.
5. Exercise Caution in Developing and Updating Social Media Policies Pertaining to Activities of Employees
An attorney can help you develop or modify a social media policy so it does not restrict employees’ rights to organize under the NLRA.
6. Keep Independent Contractors Independent
While these employment compliance tips may be useful, an experienced attorney can help you manage your independent contractors so they remain independent in the eyes of a court or tribunal. Improperly managed, your relationships with these contractors can put your business in the position of an employer or a joint employer. If your business is deemed an employer, you can be liable for the employer obligations attendant to its employees. This can include pay and benefits, depending on the specific circumstances.