March 1998

Workplace Labor Update - How the New NLRB Will Affect Your Business – March 1998

10 min

On November 12, 1997, the U.S. Senate confirmed four new members of the National Labor Relations Board — the most sweeping change in the makeup of the five-member Board in decades. Joining holdover Chairman William B. Gould were two appointees who had previously been aligned with labor union interests, Sarah Fox and Wilma Liebman, and two appointees who had previously represented management, Robert Brahm and Peter Hurtgen. The appointments ended several years of NLRB vacancies and recess appointments.

As a result of the new Board appointments, the NLRB stands poised to issue a significant number of decisions in important areas of labor law affecting many American businesses. Depending largely on how Chairman Gould votes, decisions by the Board in pending cases could fundamentally change the employment of contingent workers and could expand the reach of labor laws to include new categories of employees, such as hospital interns and primary care physicians. Other decisions by the NLRB could increase the ability of unions to organize new workplaces and could restrict employer rights of free speech and access to the courts. The Board is also wrestling with new technologies such as e-mail and videos, and new union tactics, such as salting. As is further discussed below, 1998 promises to be a watershed year for labor relations issues at the NLRB.

Contingent Workers

One area of great concern for many employers is the law affecting so-called "contingent" workers. These include temporary staff employees as well as independent contractors. In December 1996, the NLRB held oral arguments in two consolidated groups of cases known as Jeffboat Division/American Commercial and Roadway Package System. In the Jeffboat cases, the AFL-CIO asked the Board to change the standards for establishing "joint employer" status in connection with contingent workers. Labor organizations particularly want to be able to obtain NLRB elections among temporary employees, with or without the primary employer’s consent. In the Roadway cases, involving delivery workers and owner-operators, unions have sought sweeping changes in the Board’s analysis of independent contractor status. The unions want the NLRB to modify its traditional "right of control" test in favor of a standard which relies on the "economic dependency" of the contractor/employee.

Both the Jeffboat and Roadway Packaging issues could affect millions of employees and, of course, their employers. The previous NLRB never reached a decision on these important cases, because the Board members who actually heard the arguments, except for Chairman Gould, all left the agency before any decision could be issued. This year, the new Board members will revisit these cases and will make decisions which could be quite far reaching. In particular, the Board could reverse past precedent by changing the standards for determining exactly who are the employers of a contingent workforce.

The hiring of temporary staff employees and the use of independent contractors are indispensable and entirely lawful methods of operation in many industries. Employers who make use of such contingent workers should closely monitor the Jeffboat and Roadway Express cases during the coming year.

Healthcare Workers

Independent contractor status is also a significant issue in the healthcare industry. In the case of AmeriHealth, Inc./AmeriHealth HMO, the new Board will have to determine whether primary care and specialty physicians are employees or independent contractors. At issue once again is the Board’s application of its "right of control" test for independent contractor status.

Perhaps even more contentious is the issue of whether hospital interns, residents, and fellows are to be treated as "employees" or "students." That question has been squarely presented to the Board in the case of Boston Medical Center Corporation. Numerous labor organizations have filed briefs with the NLRB asserting that the daily duties of the hospital "housestaff" workers at issue are indistinguishable from those of regular employees. The unions have asked the new Board to reverse its long standing precedent in Cedars Sinai Medical Center, which held in the mid-1970’s that "housestaff" are primarily students, not employees. Several health care organizations, on the other hand, have contended that academic standards of teaching would be compromised by any change in the Board’s policy toward interns, residents and fellows.

Union Organizing

Recent statistics have shown a continuing decline in the share of the workforce represented by labor unions (now below 10% of the private non-agricultural workforce). In response, the AFL-CIO has invested heavily in efforts to organize new members. A number of cases pending before the NLRB deal with issues arising out of the union organizing process.

One long-awaited series of cases deals with the use of videos by employers during a union campaign. In Sony Corp. of America, 313 NLRB 420 (1993), the Board required employers to obtain "informed consent" prior to using employee images in a campaign videotape. In Allegheny Ludlum, 320 NLRB 484, enf. den., 104 F. 3d 1354, 1368 (D.C. Cir. 1997), the Board prohibited employers from obtaining the required "informed consent" through an "opt-out" form. In Flamingo Hilton-Reno, however, an Administrative Law Judge permitted an employer to use videos of employees who "opted in" on a consent form with appropriate disclaimers of coercive intent.

The previous NLRB held an oral argument on the Flamingo Hilton-Reno case at the ABA convention in August 1996, but once again, no decision was issued thereafter, and the Board’s new membership was not present for that debate. The case presents an apparent conflict between the protected free speech rights of employers under Section 10(c) of the Act and the Board’s efforts to regulate campaign conduct, including the "polling" of employees.

The new Board may also be asked to confront new technology in deciding the rights of employees and unions to solicit co-workers through their employers’ e-mail. A recent Bar Association meeting featured papers on the use of e-mail for solicitation purposes and the ability of employers to control this new medium of employee expression. Unions are asking the NLRB to find that an employer’s restriction of union access to e-mail is discriminatory, when the employer has not similarly restricted other employee communications.

In another area related to Union organizing, the new NLRB has already announced that it is backing away from a previous initiative on the geographic scope of petitioned-for bargaining units. In 1996, the Board proposed to codify a presumption in favor of single site bargaining units in which NLRB elections could be conducted. In order to carve out an individual work site for organizing purposes, except in extraordinary circumstances, unions would only have had to show that a particular store or work site employed 15 employees, was located at least one mile from an employer's other facilities and was separately supervised. Congress passed a rider to the NLRB’s appropriations bill prohibiting the single site unit rule, and opposition continues unabated today. However, as recently as last year, the Board issued decisions in the cases of D&L Transportation, Inc., 156 LRRM 1033 (1997), and Dattco, Inc., 156 LRRM 1239 (1997) which promoted a rigid presumption in favor of single location units, even without a formal rule. It remains to be seen whether the NLRB will enforce a de facto single site organizing rule in future cases. All employers with multiple branches or work sites should monitor this issue carefully.

Union Salting Tactics

For the last several years, the NLRB has been flooded with hundreds of cases involving the union tactic known as "salting," in which paid and unpaid union agents openly have demanded employment for the ostensible purpose of organizing the workplace and have filed charges against those employers who have turned them down. The Supreme Court’s 1995 decision in Town & Country Electric v. NLRB, 516 U.S. 85 (1995), exacerbated the problem by finding that union agents should be treated like bona fide employee applicants. Since then, the NLRB has made dozens of findings against employers and caused many other companies to spend large sums of money on legal fees in defense of charges by union agents.

Several recent court decisions have taken issue with the Board’s approach to the hiring process. In BE&K Construction Corp., 157 LRRM 2335 (11th Cir. 1997), a court found that the NLRB had unlawfully interfered with an employer’s free speech right to express its desire to remain non-union and to establish uniform hiring practices. In TIC, The Industrial Co., 1997 U.S.App. LEXIS 27284 (D.C. Cir. 1997), another court found that the Board had improperly found fault with an employer’s neutral hiring policies.

Similarly, in Architectural Glass & Metal Co., Inc. v. NLRB, 107 F. 3d 426 (6th Cir. 1997), the court upheld over the objection of the NLRB an employer’s "no moonlighting" policy. Likewise in H.B.Zachry v. NLRB, 127 F.3d 1300 (11th Cir. 1997), the court permitted an employer to refuse to hire union organizers who had violated company policies restricting information on employment applications.

In the face of this growing judicial discontent, the new NLRB will be called upon in 1998 to decide a host of pending issues relating to salting, with a potentially significant impact on all employers. Among the pending issues are the extent to which employers will be permitted to enforce neutral hiring policies as a response to union organizing, and the question of which hiring policies will be deemed to be "neutral." Issues also remain as to the appropriate method for calculating backpay in salting cases, and the right of unions to provide false employment information on employment applications. A number of cases are also expected to test the limits of protected activity of union agents once they are hired, including efforts by such agents to convince co-workers to quit, engage in intermittent strikes and similar misconduct. Meanwhile Congress continues to consider legislation to correct the present state of the law, which appears to encourage union agents to abuse the charge-filing process at the NLRB.

Access to the Courts

Partly because the unions have not succeeded in convincing new workers to join their ranks or vote freely for representation, labor organizations have increasingly resorted to "top down" pressure tactics such as salting and so-called corporate campaigns. In a number of cases, employers have contended that the union tactics have been illegal, violating state and federal laws relating to fraud, defamation, interference with contracts, antitrust, RICO, trespass, and violence, among other claims. However, the NLRB has increasingly restricted the right of employers to seek redress in the courts for such violations of law.

Applying a Supreme Court decision known as Bill Johnson's Restaurants v. NLRB, 461 U.S. 731 (1983), the Board has found that any unsuccessful lawsuit by an employer against an employee or union violates the National Labor Relations Act, if deemed by the NLRB to have been undertaken for a retaliatory motive, or if preempted by federal labor law, as interpreted by the Board. As a result of this NLRB policy, many employers have been left without a remedy for damaging union conduct or have actually had to pay a union’s attorney fees in addition to the employer’s own. Several important cases on this issue are pending before the new NLRB, which will test the Board’s ability to restrict employers’ right of access to the courts.

Other Pending Developments

Apart from the pending cases mentioned above, the new NLRB will continue to decide important issues involving employment discrimination, impasse bargaining, strikes and picketing, and the use of injunctions under Section 10(j) of the Act. The coming year will also see confirmation battles over the crucial appointments of the General Counsel and the NLRB Chairman. The former General Counsel, Fred Feinstein, was vigorously criticized by management groups, and recently withdrew his name from consideration for another term. The Administration appointed Feinstein to the position of Acting General Counsel on March 3, 1998, and is presently preparing to nominate a successor. Chairman Gould is scheduled to return to his professorship at Stanford in August 1998, and the appointment of his successor is sure to be controversial.

Pending legislation and regulatory proposals could also have a significant impact upon the NLRB. One proposed regulation is expected to significantly increase the importance of NLRB decision-making during the coming year, in that the Clinton Administration is proposing to debar all government contractors found to have committed unfair labor practices. These proposed "blacklisting" regulations could dramatically affect billions of dollars worth of government work, as labor unions file thousands of unfair labor practice charges against employers each year with the Board. There will be major efforts in the courts and in Congress to block the proposed regulations.


Notwithstanding the decline of union representation over the last several decades, the NLRB remains a powerful regulatory force in our society. The reestablishment of the Board’s full membership after years of vacancies and disarray forebodes important decision-making in 1998 which will have a significant impact on all employers.