A National Labor Relations Board administrative law judge in February struck down two provisions in a severance agreement relating to confidentiality and participation in third-party claims. In Baylor University Medical Center, the administrative law judge (ALJ) concluded that these provisions violated the National Labor Relations Act (NLRA) because they had the effect of restricting protected conduct and were not justified by any countervailing concerns. The ALJ relied on the board’s recent Boeing Company decision that outlined a new framework for reviewing employer policies.

Under the board’s new standard announced in Boeing Company, when reviewing policies that appear neutral but could interfere with NLRA rights, the board will evaluate 1) the nature and extent of the potential impact on protected rights and 2) any legitimate justifications associated with the rule. The board explained that this new analysis was necessary because the previous framework had resulted in the invalidation of many “common-sense rules that most people would expect every employer to maintain.”

In the Baylor University case, one of the few ALJ decisions released since Boeing Company was decided, the ALJ invalidated a provision in the severance agreement requiring the employee to “keep secret and confidential and not … utilize in any manner all … confidential information of … [Baylor]” that was made available to her during her employment, including information about personnel lists and “financial and other personal information regarding … employees.” The ALJ found that this language would unlawfully prevent the employee from discussing wages, benefits and other conditions of employment and was not justified by Baylor’s rationale that the rule was necessary to prevent the disclosure of private health information. The ALJ also struck down a provision that would have prevented the employee from pursuing, assisting or participating in any claim brought by a third party against Baylor. Again, the provision was found to restrict protected activity by preventing the employee from providing information to board agents in support of unfair labor practice charges. Baylor offered no justification in defense of this provision. 

Although the Baylor University case is only an ALJ decision — not a decision of the board itself — it provides a warning to employers to review employee policies and standard separation or severance agreements for confidentiality provisions that may be broadly construed as restricting participation in protected activity. Employers that wish to incorporate confidentiality restrictions or provisions related to participation in third-party claims into standard agreements should carefully craft these sections to avoid curbing protected activity. Additionally, employers should be prepared to offer reasonable justifications for such provisions in the event that they do have an effect on protected activities.

The federal employment law landscape saw some interesting developments in 2017, as well as some anticipated changes that were ultimately halted or delayed. Below is a summary of major federal employment law headlines and a look at what employers can expect in 2018.

For Missouri and Illinois employers specifically, a review of 2017 updates and a look forward at 2018 can be found here.

Rules and regulations: Delayed, but not forgotten

Although 2017 was filled with promises and proposals of forthcoming federal rules and regulations, we saw many of these rules delayed, reworked and pushed off until 2018. Included in these delays were the following regulations:

FLSA Final Rule: On May 18, 2016, the U.S. Department of Labor (DOL) released the Final Rule updating the regulations defining and limiting “white collar” overtime exemptions under the Fair Labor Standards Act (FLSA). These rules would apply to workers who fall under the executive, administrative or professional exemptions from the FLSA’s minimum wage and overtime protections. The Final Rule also set the minimum salary threshold for employee exemptions from overtime pay at $47,476 per year ($913 per week) — a 101 percent increase above the previous minimum. The rule was set to go into effect Dec. 1, 2016, until a Texas federal judge issued an order on Nov. 22, 2016, to block the regulation.

The Obama DOL initially defended the Final Rule and appealed the injunction to the Fifth Circuit Court of Appeals seeking to overturn the injunction. After the Trump inauguration, however, the DOL went silent regarding its position on the appeal. On June 30, 2017, the DOL informed the Fifth Circuit it had decided not to advocate for the specific salary level set in the final rule, but it requested that the Fifth Circuit approve the DOL’s use of both a “salary” and “duties” test to determine eligibility for overtime exemptions. The DOL also informed the court that it would commence further rulemaking to determine the appropriate salary levels for such exemptions. On July 26, 2017, the DOL published a Request for Information (RFI) seeking public comments, data, ideas and information on an appropriate salary level for exempt employees. The DOL allowed for a comment period of 60 days, or until Sept. 25, 2017.

Now that the DOL has had over four months to consider the public comments and responses, we expect it will reissue its Final Rule in 2018. That said, we recognize that it will likely look different than the 2016 version. In particular, we suspect the salary threshold will be lower, and there could even possibly be multiple salary levels based on factors like employer size, census region or metropolitan statistical area.

OSHA Final Rule: The Final Rule from the DOL’s Occupational Safety and Health Administration (OSHA), which took effect Jan. 1, 2017, requires certain employers to electronically submit injury and illness data that they are already required to record on their onsite OSHA Injury and Illness forms. On Aug. 1, 2017, OSHA extended the compliance date for electronically submitting the injury and illness data through the Injury Tracking Application (ITA) to Dec. 15, 2017. This allowed affected employers additional time to become familiar with the new electronic reporting system. On Dec. 18, 2017, OSHA again extended the deadline for accepting 2016 OSHA Form 300A data through the ITA until midnight on Dec. 31, 2017. OSHA stated that it would not take enforcement action against those employers who submit their reports after the Dec. 15, 2017, deadline but before Dec. 31, 2017. Starting Jan. 1, 2018, the ITA would no longer accept the 2016 data.

OSHA has stated that it is currently reviewing the other provisions of its final “Improve Tracking of Workplace Injuries and Illnesses” rule and intends to publish a notice of proposed rulemaking to reconsider, revise or remove portions of that rule in 2018.

ERISA Rule: At the beginning of 2017, the DOL finalized amendments to the Employee Retirement Income Security Act (ERISA) claims and appeals procedures for disability benefit plans. The DOL originally indicated that plans covered by ERISA must comply with the Final Rule by Jan. 1, 2018. The amended regulations require plans to provide more detail in denial notices, impose additional criteria to ensure independence and impartiality in decision-making. The new rules also allow claimants to go directly to court if a plan’s procedures do not strictly comply with the final rules, and make disability claims subject to the same “culturally and linguistically appropriate” rules as group health plan claims.

On Oct. 12, 2017, the DOL announced a 90-delay of the implementation of the amended ERISA claims procedure rule until April 1, 2018, giving the DOL time to decide whether to amend, modify or rescind the Final Rule. The DOL’s proposed delay was prompted by concerns raised by various stakeholders and Congress that the Final Rule would increase the cost of offering disability benefits plans to employees, increase litigation, and ultimately result in employees having less access to disability benefits. The DOL allowed additional time for comments and data submissions, but later issued a press statement that while it received numerous complaints about the new rule, only a few of them provided substantive criticism.

On Jan. 5, 2018, the DOL announced that the Final Rule will become effective on April 1, 2018. For more information and an in-depth discussion of the new claims procedures, see our detailed post here.

Title VII: Circuit Split on Sexual Orientation

Last year brought a closer look at whether sexual orientation is protected under Title VII of the Civil Rights Act of 1964. The verdict is still out in several jurisdictions, but the Second, Seventh, and Eleventh Circuits have spoken. The Second and Eleventh Circuits found that Title VII does not prohibit sexual orientation discrimination, while the Seventh Circuit Court of Appeals ruled that Title VII protection extends to sexual orientation as a form of sex discrimination. Despite ripeness for a resolution, in December 2017 the Supreme Court denied a petition for writ of certiorari in the Eleventh Circuit case, Evans v. Georgia Regional Hospital, (No. 17-370, certiorari denied 12/11/2017). So, the opportunity for clarity from the Supreme Court remains. Presently, however, employers are advised to check local and state laws for guidance, keeping in mind that several state and local jurisdictions have already provided protection against sexual orientation discrimination. Find a more detailed discussion on this circuit split here.

SCOTUS preview

2018 promises to be an interesting year for employment law at the U.S. Supreme Court, as the court gears up to address multiple questions that might affect your business. In the coming year, we can expect decisions on the issues described below.

Can public employees be required to pay “fair share” union fees?

For the third time in four years, the Supreme Court will consider whether public sector workers can be required to pay “fair share” union fees despite not being union members in Janus v. AFSCME. In 1977 in Abood v. Detroit v. Board of Education, the Supreme Court approved of fair share fees, but recent cases have asked the court to overrule this decision in light of First Amendment concerns. In 2014, the court reviewed fair share fees for public employees in a case involving home health aides but skirted the issue by deciding that the workers in question were not public employees. The justices heard a similar case in 2016, but Justice Scalia’s death left the court deadlocked. Now with Judge Gorsuch on the bench and an administration that supports overturning the Abood decision, the court will hear oral argument on this issue on Feb. 26.

Can arbitration agreements contain class action waivers?

Earlier this term, the Supreme Court heard oral argument in a trio of cases asking whether arbitration agreements between employers and individual employees that contain class action waivers violate the National Labor Relations Act by preventing employees from engaging in “concerted activity” with their coworkers. At issue is a clash between the NLRA, which permits employees to band together to for “mutual aid or protection” and the Federal Arbitration Act, which provides that arbitration agreements should be enforced unless there is a clear contrary command from Congress. A decision barring class action waivers in arbitration agreements would have sweeping effects, invalidating an estimated 25 million employment agreements. Stay tuned for the court’s final ruling and opinion.

Does a business have to make a cake for a same-sex wedding?

In December, the Supreme Court heard oral arguments in the now well-known Masterpiece Cakeshop v. Colorado Civil Rights Commission case. This case stems from a baker’s refusal to make a wedding cake for a same-sex couple — a refusal that led the Colorado Civil Rights commission to find a violation of a Colorado state public accommodations law prohibiting discrimination on the basis of sexual orientation. The baker then sued, alleging that the application of the anti-discrimination law violated his sincerely held religious beliefs and his freedom of expression. The Supreme Court’s ultimate decision has not yet been penned, but either way the justices decide, it will certainly be a landmark decision for the LGBTQ population. If the court finds in favor of the bakery, the free speech or freedom of religion card could trump any state law prohibiting places of public accommodation from discriminating on the basis of sexual orientation. Around 20 states currently have such laws on their books.

If you have questions about any of the topics addressed in this update, or if you want to discuss how these issues may impact your business, contact any of the attorneys in our Employment & Labor Group.

Employers in Missouri and Illinois saw the passage of several new employment-related laws in 2017. Below is a look at some legislative highlights of 2017 and how they might affect your business in 2018.

Missouri employment laws

Missouri minimum wage change: Effective Jan. 1, 2018, the minimum wage in Missouri is $7.85. This applies to all Missouri businesses except retail and service businesses with less than $500,000 in gross sales. (Some agricultural employees and certain classifications of employees are also exempt.) Tipped employees’ total hourly wage must equal at least $7.85, with employers required to pay at least 50 percent and to adjust if needed to bring that employee to the minimum wage threshold. Employers should keep in mind that failure to comply could result in misdemeanor charges and civil penalties. In addition, employers need to ensure that their labor law posters are current with this update.

Missouri also enacted a law in 2017 to invalidate city ordinances increasing minimum wage requirements within city limits, including a prior St. Louis City ordinance that increased the minimum wage to $10. Therefore, minimum wage requirements will remain set by the Missouri legislature for the foreseeable future.

Missouri Right to Work Law: In February 2017, Missouri Gov. Eric Greitens signed into law Missouri’s right-to-work legislation, which was slated to take effect on Aug. 28, 2017. The law would have banned mandatory union dues. However, the Missouri AFL-CIO petitioned for a referendum to put the issue before voters — effectively suspending the right-to-work law from taking effect. Now, the law is set for a public vote on the November 2018 ballot.

Missouri Human Rights Act changes: As we have been reporting over the past year, the Missouri Human Rights Act underwent major changes in 2017. The majority of these changes apply to the enforcement side of the law rather than the day-to-day compliance side. Nevertheless, employers should familiarize themselves with these changes to better understand potential liability for violations. A short list of the changes is provided below, and a more comprehensive summary can be found here:

• Changes the burden of proof from the contributing factor standard to motivating factor;
• Imposes caps on damages for a prevailing plaintiff based on the size of the employer;
• Removes supervisors and others from individual liability;
• Requires Missouri courts to heavily rely on the judicial interpretations of federal anti-discrimination laws;
• Requires Missouri courts to give a “business decision” jury instruction if requested by the employer;
• Encourages Missouri courts to summarily dispose of cases that lack sufficient facts prior to trial and apply the U.S. Supreme Court’s burden shifting framework used in Title VII cases;
• Permits employers to raise timeliness defenses at any time during the administrative charge phase or litigation; and
• Codifies the common law exceptions to the at-will employment doctrine by implementing the “Whistleblower’s Protection Act” that, in part, prohibits recovery of unfettered punitive damages by allowing recovery of liquidated damages in egregious circumstances.

Illinois Employment Laws

Illinois Freedom to Work Act (820 ILCS 90): The Illinois Freedom to Work Act, enacted in 2017, prohibits employers from entering into noncompetition agreements with employees who earn less than the applicable minimum wage or less than $13 per hour (whichever is greater). Under the act, these prohibited agreements include any agreement that restricts a low-wage worker’s ability to work for other employers within a particular time period, geographic area or industry. The act was seen as a response to the increased use of non-competition agreements among fast-food chains and other employers of typically low-wage workers. Notably, the act does not prohibit or restrict nonsolicitation agreements or nondisclosure and confidentiality agreements.

Amendment to the Genetic Information Privacy Act (410 ILCS 513/25): This amendment, effective Jan. 1, 2018, prohibits employers from penalizing employees who refuse to disclose genetic information or participate in workplace wellness programs that require disclosure of such information. The Illinois Genetic Information Privacy Act was enacted in 1997 and provides that employers may not use genetic information or testing in furtherance of wellness programs unless: (1) the employer offers the health or genetic services; (2) the employee provides written authorization; (3) only the employee, the employee’s family member receiving the services, and the licensed health care professional/genetic counselor receive the individualized results of the services; and (4) any individually identifiable information is only available for purposes of such services and shall not be disclosed to the employer except in aggregate terms that do not disclose the identity of specific employees. 

Illinois “Religious Garb” Law (775 ILCS 5/2-102(E-5)): Effective Aug. 11, 2017, the Illinois Human Rights Act (IHRA) was amended to clarify that it is considered unlawful religious discrimination to impose an employment condition that would require an applicant or employee “to violate or forgo a sincerely held practice of his or her religion including, but not limited to, the wearing of any attire, clothing, or facial hair in accordance with the requirements of his or her religion.” However, if the employer, after engaging in a bona fide effort, demonstrates that it is unable to reasonably accommodate the employee’s or applicant’s sincerely held religious belief, practice or observance without undue hardship on the conduct of the employer’s business, then the restriction will be found to be non-discriminatory. The amendment does not prohibit an employer from enacting a dress code or grooming policy that may include restrictions on attire, clothing or facial hair to maintain workplace safety or food sanitation.

If you have questions about any of these Missouri and Illinois updates, or if you would like to discuss how your business may be impacted, please contact any of the attorneys in our Employment & Labor Group. To read about national updates in 2017 and 2018 that may be relevant to your business, check out this post.

The U.S. Department of Labor (DOL) this month issued its revised Fact Sheet #71 on “Internship Programs Under the Fair Labor Standards Act” outlining that the agency will rely on the court-approved “primary beneficiary test” to determine whether an intern should be considered an employee under the Fair Labor Standards Act (FLSA). 

The release of the revised Fact Sheet comes on the heels of the decision from U.S. Court of Appeals for the Ninth Circuit in Benjamin v. B&H Education, Inc., 877 F.3d 1139 (9^th Cir. 2017), which expressly rejected the DOL’s six-part test.  The Ninth Circuit became the fourth appellate court to reject the DOL’s “too rigid” methodology. 

The revised Fact Sheet explains that the agency will now use the “primary beneficiary test” to determine whether an intern or student should be considered an employee under FLSA, thus requiring the employer to pay minimum wage and overtime pay.  The test looks to the “economic reality” of the intern-employer relationship and turns on which party is the “primary beneficiary” in the relationship.  The test measures the existence and degree of the following seven factors in the relationship, with no single factor being determinative:

1. Expectation of compensation;
2. Training similar to educational environment;
3. Ties to formal education program;
4. Accommodation of academic commitments;
5. Limited duration;
6. Work complements rather than displaces work of paid employees; and
7. Expectation or entitlement to paid job at conclusion.

While the DOL’s shift provides more clarity to employers in determining whether they have bonafide unpaid internship programs, the analysis is still very fact-based and depends upon the unique circumstances of each intern position. If you have any questions regarding your internship program or how this shift impacts your business, please contact any of the attorneys in our Employment & Labor Group.

On January 5, 2018, the Department of Labor (DOL) Wage and Hour Division reissued 17 opinion letters to shed light on the DOL’s stance on numerous issues under the Fair Labor Standards Act (FLSA). Under the administration of President George W. Bush, the DOL issued 36 opinion letters, many of which were recalled under President Barack Obama in early 2009. A year later in 2010, the Wage and Hour Division announced it would no longer issue opinion letters in response to employer and business questions about wage and hour issues under the FLSA.

The recently reinstated opinion letters cover a wide range of topics including salary deductions, compensable on-call time, bonuses, employee classifications and exemptions. Although not binding, the letters do offer helpful guidance, especially in the grey areas of the FLSA. Some of the opinion letters include:

• FLSA2018-14
  • Findings: Deductions from salary may also be made for absences of one or more full days occasioned by sickness or disability (including work-related accidents), if the deductions are made “in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability.” Deductions from an employee’s guaranteed salary for absences may only be taken under section 541.602(a) if the employee misses one or more full days of work. Id. The regulations do not permit salary deductions for partial day absences.
• FLSA2018-11
  • Findings: Certain job bonuses must be included in the regular rate under section 7(e) of the FLSA. The FLSA provides that the “regular rate” includes “all remuneration for employment paid to, or on behalf of, the employee” (29 U.S.C. § 207(e)) and is the rate used to determine overtime wages.
• FLSA2018-9
  • Findings: A percentage-of-total-earnings, nondiscretionary bonus needs to apply the percentage only to remuneration includable in the regular rate of pay, which includes overtime. Earnings excludable from the regular rate include expense reimbursements, pay for holidays and vacations, and discretionary bonuses.
• FLSA 2018-7.
  • Findings: An employer may calculate a salary deduction for a full-day absence based on the number of hours actually missed. Thus, for example, if an employee was scheduled to work Friday from 2:30 p.m. to midnight, but was unable to work any hours that day for one of the reasons described in section 541.602(b) (absence for personal reasons, absence occasioned by sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice, or unpaid disciplinary suspension imposed in good faith for infractions of workplace conduct rules), the employer could deduct 9.5 hours from the employee’s salary (i.e., the amount actually missed) in accordance with section 541.602(c).

The full list of letters can be found on the DOL website here. Of course, a few of the letters will have a broader and more significant impact on some employers, and some of the letters are very technical or industry-specific. Overall, the opinion letters will guide businesses and employers through certain regularly reoccurring wage and hour issues under the FLSA and will be especially helpful for those businesses that encounter a fact situation already addressed by the Division.

If you have any questions about the DOL’s reissued opinion letters, or want to discuss what these mean for businesses and employers, please contact any of the attorneys in our Employment & Labor Group.

In a surprising move, the U.S. Department of Labor (DOL) announced that the Final Rule, changing the claims procedure for ERISA- governed disability plans, will become effective on April 1, 2018. The DOL previously delayed the Jan. 1, 2018 effective date to allow additional time for comments and data submissions and to give the DOL time to amend or rescind the Final Rule. In a press statement released on Jan. 5, 2018, the DOL stated that while it received numerous complaints about the New Rule, only a few of them provided substantive criticism. 

The Final Rule will have a significant impact on ERISA-governed disability plans and the cost of administering those plans. For a more comprehensive look at the many changes the Final Rule provides and how it may impact your disability plan, see our previous blog post here. If you have further questions, please contact the attorneys in our Employment & Labor Group or Employee Benefits Group.

A wave of class action lawsuits has been filed alleging violations of the Illinois Biometric Information Privacy Act (BIPA), a statute aimed at regulating how companies use information based on “biometric identifiers” such as fingerprints and retina scans. Violating BIPA can be costly, so employers operating within Illinois should review their business practices to determine whether they are using “biometric information” and plan accordingly.

Although many of the early lawsuits filed under BIPA targeted technology companies for their use of facial recognition software, recent litigation has focused on employers that use fingerprint-scanning technology to allow employees to clock in and clock out. BIPA regulates a private entity’s ability to collect, store and disclose biometric information. The statute defines biometric information as that based on individual identifiers such as fingerprints, retina scans or voiceprints. As the statute explains, these cannot be changed, unlike other unique identifiers such as Social Security numbers.

Citing the public’s concern with the use of biometrics for business transactions and the “heightened risk of identity theft” biometric information entails, the Illinois legislature sought to protect individual privacy and encourage private entities to bolster information security by passing BIPA in 2008. The statute flew under the radar until the first surge of class action lawsuits in 2015. These private actions picked up steam in the latter half of 2017, with dozens of new class action suits filed since July. And it’s easy to see why the plaintiffs’ bar has taken notice: The penalties associated with BIPA range from $1,000 to $5,000 per violation and include attorneys’ fees.

Fortunately for employers, compliance with BIPA is fairly straightforward. At minimum, entities that use biometric information must:

• Adopt a written policy with a retention schedule and guidelines for permanently destroying the information, and make this policy available to the public.
• Obtain informed, written consent from any employee whose biometric information is obtained.
• Make reasonable efforts to store, transmit and protect from disclosure all biometric information, including taking steps comparable to those taken for other confidential and sensitive information.

Additionally, employers are prohibited from disclosing biometric information unless an employee consents to the disclosure or the disclosure is required by law or by a valid subpoena or warrant. Employers are absolutely prohibited from selling, leasing, trading or profiting from any employee’s biometric information.

Other states have followed Illinois’ lead on biometric information privacy laws: Texas and Washington have laws on the books, and legislation is pending in several states.

To determine whether your company is subject to the requirements of state biometric information privacy laws or to design a biometric information security program, contact your Greensfelder attorney or any member of the Employment & Labor practice group.    

To read more about how BIPA is specifically affecting the franchise industry, please see our previous Franchising & Distribution Blog post here.

The National Labor Relations Board (NLRB) on Dec. 14, 2017, overturned significant prior precedent related to its position governing workplace policies and handbooks and its joint employer standard. These decisions are significant because they reversed two previous standards that had caused numerous headaches for employers.

The board determines the ‘reasonably construe’ test for employer policies lacks common sense

In The Boeing Company and Society of Professional Engineering Employees in Aerospace, IFPTE Local 2001, 365 NLRB No. 154 (Dec. 14, 2017), the NLRB was asked to review the Boeing Company’s no-camera rule and determine whether the policy violated employees’ Section 7 rights. Under the existing NLRB standard, set forth in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), facially neutral rules violated the NLRA, even if those rules did not explicitly prohibit protected activities, were not adopted in response to such activities, and 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 a 3-2 decision, the NLRB overruled Lutheran Heritage. The board majority said the reasonably construed test was exceptionally difficult to apply, created immense uncertainty for the board, courts, employers, employees and unions, and resulted in rampant confusion as to what rules and policies and handbook provisions were acceptable. The board found:

These problems have been exacerbated by the zeal that has characterized the Board’s application of the Lutheran Heritage “reasonably construe” test. Over the past decade and one-half, the Board has invalidated a large number of common-sense rules and requirements that most people would reasonably expect every employer to maintain. We do not believe that when Congress adopted the NLRA in 1935, it envisioned that an employer would violate federal law whenever employees were advised to “work harmoniously” or conduct themselves in a “positive and professional manner.”

In place of the “reasonably construe” standard, the board established a new test: When evaluating a facially neutral policy, rule or handbook provision that would potentially interfere with the exercise of NLRA rights, the board will evaluate two things:

1. the nature and extent of the potential impact on NLRA rights, and
2. legitimate justifications associated with the rule.

The board 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 board 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. An example of a Category 1 rule would be a rule requiring employees to conduct themselves in a professional manner.
• 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. Boeing’s no-camera rule fit within this category.
• Category 3 will include rules that the board 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.

In applying this new standard to the Boeing Company’s no-camera policy, the board concluded that Boeing lawfully maintained a 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 board 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. 

Board returns to pre-Browning-Ferris joint employer standards

In Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 361 NLRB No. 156 (Dec. 14, 2017), the NLRB nixed the Browning-Ferris expansion of the joint employer doctrine. Although the board ultimately concluded that Hy-Brand and Brandt are collectively joint employers for purposes of the NLRA, the NLRB rejected the Browning-Ferris standard, stating:

We find that the Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, it is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.

In a major Obama-era decision, Browning-Ferris Industries of California, Inc. 362 NLRB No. 186 (Aug. 27, 2015), the board found that an entity could be a joint employer with another if the first entity had the potential to exercise control over the labor and employment conditions of the second entity’s employees. Importantly, an entity could be a joint employer with another even if no actual control was exercised. When applied, this expanded Browning-Ferris standard resulted in more and more separate and distinct employers being considered “joint employers” for purposes of the NLRA.

So what does a return to a pre-Browning-Ferris joint employer doctrine look like? Under the previous standard that now applies again, two employers were only considered “joint employers” when they exerted significant and direct control over the same employees, such that they shared or co-determined matters relating to the essential terms and conditions of employment. Relevant factors include control over hiring, termination, discipline and supervision of employees. Unlike the Browning-Ferris standard, control must be actual, direct and substantial — limited or routine control will not satisfy the joint-employer standard.

From a franchise standpoint, it is likely the board’s decision in Hy-Brand will put franchisors at ease. Going forward, it is clear that typical, brand-related standards and requirements will not result in a finding of joint-employer status.

For more information about either of these major recent NLRB decisions or to inquire as to how your business or operations may be affected, please contact any of the attorneys in our Employment & Labor Group.