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Season 1, Episode 5: NLRB Update, Part 2: Significant NLRB Decisions and Their Effect on Employers
From Lawyer to Employer: A Shipman Podcast
In our first episode, NLRB Update, Part 1: Latest Guidance from the General Counsel's Office, host Gabe Jiran was joined by labor and employment lawyer Jarad Lucan for a discussion about the NLRB General Counsel's initiatives for the next four years and what they may mean for employers.
In NLRB Update, Part 2: Significant NLRB Decisions and Their Effect on Employers, Gabe and Jarad continue their discussion about recent NLRB decisions that touch on those previously discussed initiatives. Tune in to learn about pending cases that have the potential to change the standards for employers and unions alike.
Welcome to From Lawyer to Employer: A Shipman Podcast, bringing you the latest developments in labor and employment law, offering you practical considerations for your organization. You can subscribe to this podcast on Spotify, Apple Podcast, Google Podcast, or wherever you listen. Thank you for joining us, and we hope you enjoy today's episode.
Gabe Jiran: Welcome back to from Lawyer to Employer: A Shipman Podcast. I'm your host, Gabe Jiran, and I'm happy to bring you part two of our series regarding the National Labor Relations Board. In part two, I have my colleague and partner, Jarad Lucan here with me.
Jarad Lucan: Good afternoon, Gabe. Thanks for having me again.
Gabe Jiran: Of course. So in part one, we talked about what the General Counsel from the NLRB had established as initiatives or goals for the next four years or so. And today we're going talk about actual decisions, a couple of which actually touch on some of those initiatives. And so it may be of interest to you to see how this is actually happening in real life. One really hot topic for employers has been their work roles or their policies and handbooks, as we said in the first part of this podcast, that is something that's been a little bit of a pendulum swinging back and forth, but Jarad my understanding is there's actually a case out there that may change some standards.
Jarad Lucan: Yes, so there's a Stericycle case, right? Which, right now the Labor Board has asked for briefs on, amicus briefs, to determine whether or not the current standard that is applied to facially neutral workplace rules, such as confidentiality rules, non-disparagement rules, workplace sort of courtesy rules should be analyzed in a way that is different than what we are currently doing now, based on the Boeing case, that was decided a few years back under the previous Administration board. And so what this case is really looking at in particular, in this case, what the issues were, had to deal with personal conduct rules, conflicts of interest rules and confidentiality and harassment complaints. And these are all facially neutral rules, right? They're not rules that clearly apply to union activity. They're not rules that clearly were put in place because of a union organization effort or because employees were engaging in Section VII rights.
The real question is, do these rules on their face, violate the act, right? When applied to a certain situation, the current standard sets forth in the Boeing case, and then cases after that LA Specialty Produce, which was decided in 2019, the way in which the board currently is analyzing these facially neutral rules, looks at the nature and extent of the potential impact on an NLRA rights. Section VII rights for employees and the legitimate justification for the rule, right? Why did the employer implement the rule in the first place? And by doing so, the labor board then looks at three different categories of rules, right? Rules, which are lawful to maintain, right? That the rule is reasonably interpreted, doesn't prohibit or interfere with Section VII rights. And there's a clear justification for it. Those are category one rules, right? Then there's these category two rules, which will include rules that warrant individual scrutiny to decide whether or not they violate the act or not, right? So they're not these sort of rule one per se, okay rules.
And then there's category three rules, which include rules that the board will designate as unlawful to maintain because they clearly prohibit or limit section seven protected conduct. And the adverse impact on those rights outweighs the justification form, right? There's no real reason for it. And so that's the analysis that we have in place. Now, what this Stericycle case is looking to accomplish is, should the board continue to adhere to that standard that we just walk through? Or is a return to a much more, I would say, employee potentially union friendly standard, more appropriate. And when we talk about what that standard might be, it's this standard that dates back to 2004 from a Lutheran Heritage Village case. And again, we're talking about facially neutral rules, right? But under that case, what we were looking at in term to determine whether or not a facially neutral rule would violate the NLRA, is, would that rule be reasonably construed to violate section seven activity? So would an employee, could he reasonably construed it to violate Section VII activity?
So confidentiality rules might clearly apply to proprietary information or financial records or things of that nature, but would a reasonable employee look at that and say, "Oh that means I can't talk about my discipline, or I can't talk about my rate of pay." there's obviously a way of going back and forth, right? A reasonable employee wouldn't think that in the context of what the employer or a reasonable employee could look at it that way. So it was a very objective test versus the sort of categorical tests that we have now.
Gabe Jiran: Yes. And I can remember back under that standard, it caused us fits as labor attorneys, because I can remember one, there was a General Counsel memo that actually, I think there were a series of them under that standard. And you would read these policies that they've held were just fine and some had been invalidated. And it was really hard to get some consistency because, frankly, I would look at some and say, "There's no way that rule's going stand up," and it was fine. And then others were like, "I don't get it. I don't see how you come to that conclusion."
Jarad Lucan: Yeah. It's difficult to manage, right? It was difficult for all employers to know whether or not they should have these rules or not, or whether they should be putting in clarifying caveat language in, that we have this rule, but if you have to gauge an activity under the NLRA, it doesn't apply to that. Which sort of signals that there's this other, underdog that you should be engaging under, but you're right. There were a slew of case laws over the past decade or so. And general counsel memos and memos that dealt with certain provisions and whether or not they violated the NLRA or not. And to be fair, not many of them were consistent on whether or not they did or didn't. And sometimes it mattered what the provisions were surrounding that one provision say, right? In order to determine the context of this rule, it is clearly not going prohibit or a reasonable person wouldn't read this if they read everything right? But if they didn't read everything, maybe it does. And so it was this amorphous way of deciding whether or not something was, or a very vague way of deciding whether or not a handbook or policy violated the act.
Gabe Jiran: Yeah. I think anytime you have the reasonable person standard it's, the person who's deciding what a reasonable person would think is actually the one deciding what a reasonable person would think. And so I know from those prior cases you spoke of, like I said, there were a couple where you said, I don't think a reasonable person would really conclude that they're prohibited from doing certain things, but it the problem is becomes very ad hoc because it's hard to create standards or consistency when you're applying that standard. But look, the reasonable person standard is not a foreign concept we have in all areas of the law. And I get it, why they might go back to that. But I guess the bigger question is because the NLRB has asked for others to weigh in on this-
... Is that like some indication they're going change?
Jarad Lucan: And that's a great point because it's not specific that they'll go back to that way. The Lutheran heritage standard, right? There might be some other standard that they're looking at. And so they might be looking for creative ideas on how to address these things from both employer and employee side representatives. That's the whole point of it though. It's not clear about where we're going to end up on any of this, but I think some of the fears, and if we, look at some of the dissenting members, because again, this comes from a request for a review of a decision, right? And whether or not that I think there's some fear from other members or dissenting members of the board, at least that this is going to be an opportunity to undo, right? That precedent and go back to that more reasonable person standard as opposed to a categorical standard. But maybe there is some other avenue that the board will go down. It's just unclear at the moment.
Gabe Jiran: Yeah. Like maybe some sort of middle ground or something.
Jarad Lucan: Sure.
Gabe Jiran: So for all the employers out there that are listening, keep your eyes on this one. We obviously will, post things once a decision is made, but as it stands right now, anybody that wants to file a brief can do so by March 7th, 2022, and then they'll make a decision thereafter. I don't know. I would expect we'd get a decision mid to late 2022 on this one, depending on what kind of backlog they have. But it would be definitely one to watch because all employers will need to look at their policies because, we've revised many policies over the past decade in order to make sure that we're complying with the National Labor Relations Act. If this imposes some new standard, then we have to go back and look at the policies. That's obviously going be a big project for employers.
Jarad Lucan: Yeah. I think the big fair for most employers on this issue is that if anything, the Boeing standard created some predictability, right? That this is what we are allowed, right? There are categorical rules that we don't have to worry about as long as we're not implementing them in the face of a unionizing campaign or whatever else. But I think the fair is the moving away from that predictability, which, the alternative to predictability is chaos. Right? [laughs].
Gabe Jiran: [laughs].
Jarad Lucan: And so we just don't know what it's going to be and it makes it difficult to manage in a workplace. So I think there is that fair, at least from an employer side of what is the alternative going to be? And is it going be something that is easy for us to manage or are we going to have to be rewriting our policies every four years?
Gabe Jiran: Yeah. I think you made a point right at the very beginning of discussing this case where it was, these are facially neutral policies. So the easy ones are ones that say you can't engage in union activity, or you can't talk about your compensation or something like that. Those are just going be struck down immediately. It's these ones that you may not think have a tie to protected activity, but really could. And one of the one we see a lot of is the social media policies and how those have developed. And, the standard really could determine how your social media policy reads.
Jarad Lucan: Or from the Boeing case, right? Recordings in the workplace, right?
Gabe Jiran: Gotcha.
Jarad Lucan: Whether or not those types of things should be categorically depending on your workplace, right? Particularly if you're a government contractor or there's some top secret things that are confidential and propriety information you need to hide. Versus maybe that rule, isn't always going to be a category one rule depending on your, the nature of your workplace. So again, that is why the Boeing rule has some predictability, right? Because the first thing that the board is looking at is the nature and extent of the potential impact on the rights and then the justification for it. So if you don't have a good justification for it as an employer, then it's particularly going get struck down. But at least it gives employers an idea of the types of rules and policies that would be arguably upheld in their workplace. Whether it be reasonably construed standard doesn't.
Gabe Jiran: Yeah. Yeah. The recording or the taking of pictures in the workplace, that's a really hot one too, because well, look in the healthcare setting, you've got patients and manufacturing, you've got potential trade secrets or processes and all of that, which are all legitimate-
Jarad Lucan: Sure.
Gabe Jiran: ... business reasons for restricting that type of activity. But then, and there, I think there was a case on this or some guidance on this previous, it was, what does the reasonable person think the reasonable employee or this saying, "If I see a safety violation that could affect other employees, am I then prohibited from taking a picture of that to document it?" And that's, I could see the nuances of that being difficult.
Jarad Lucan: Sure.
Gabe Jiran: There's another case out there that is also going be of great interest to employers. And that has to do with independent contractors. And who's going qualify as an independent contractor. This is the Atlanta Opera case. There are all sorts of tests for who's an independent contractor and who's not this one deals solely within the national labor relations act. Who's an independent contractor or not. So what's going on with that case?
Jarad Lucan: Sure. So what we're looking at here is, again, there was a just giving you how we got to the point of asking for briefs on this case, is that there was a petition for election, right? There was a regional director directed the election of the certain wig artists, makeup artists, and hairstylist as employees of the Atlanta Opera and allowing them to have an election with the NLRB whether or not they wanted to be organized or represented by a union or not. The employer filed a petition for review claiming that the regional director did not apply the proper standard for depending whether or not these individuals were independent contractors or employees. The significance of that is huge because independent contractors do not have rights under the NLRA, right? And would not have the ability well, they could try to organize, but the employer doesn't have to recognize any organization they have because they're not employees under the act.
And so the petition for review was filed, and in the context of that petition for review, the labor board is asking for briefs as to whether or not they should revisit the recent decision that I'll get into from the Trump administration board about whether or not someone is an independent contractor or not. So in 2014, there was this FedEx Home Delivery case in which the board modified arguably previous NLRB decisions, determining who's an independent contractor or not, and really limited the entrepreneurial opportunity for economic gain issue or prong of all of that and finding that those individuals were employees in that independent contractors. And then in 2019, a new administration is in place. And in a case, a super shuttle case, the Trump administration really focused more on that economic or the entrepreneurial opportunity as opposed to the economic dependency aspect of it, and tried to go back to what it said was the proper traditional common law agency test of whether or not someone is an independent contractor or employee.
And only in 2019, so three years ago, we have a case that says, this is what the proper standard is for independent contractors, right? And this goes back to what that board said was the precedent long before 2014, when it was changed. What we're seeing now, given a new administration, right? In a new sort of pendulum swing in terms of what the agenda is for cases is the labor board looking at an opportunity, right? With a case to determine whether or not someone is an independent contractor or not, and to revisit that super shuttle case and to potentially go back to the FedEx case standard, or is there some other standard again, right? To apply. And so that's where we are at the moment, right? Again, some consistency for employers for the last couple years about whether or not certain individuals would be contractors, right? Independent contractors or employees, and now an unknown. Whether or not that standard's going apply or something else in the future.
Gabe Jiran: In layman's terms, the current standard provides a greater opportunity to argue that somebody's an independent-
Jarad Lucan: Yes.
Gabe Jiran: ... contractor, right?
Jarad Lucan: Yes. Yeah.
Gabe Jiran: So we could see that, that narrowing a bit. So in this case, they've asked for briefs as well, and they were due at the beginning of February, I think February 10th.
Similar timeline will probably, they might be, it might be issued around the same time as the prior case. We'll see depending again how things move along. But this is one really for employers to watch because the independent contractor status is something that is, it's confusing to employers. I think sometimes there's a tendency to kind of, because it's easier to call somebody an independent contractor, even when they're not, but there could be consequences. There's tax consequences obviously now there's, there's obviously labor consequences if they try to organize and we'll have to see how that plays out. But, in this particular case the individuals that were involved, makeup artists, wig artists, hairstylists, and this is, we don't have all the facts in front of us, but it seems like those would traditionally be people who are hired to come in and do specific tasks, things you would think about as independent contractors. They probably do it for other productions or other opera houses or whatever. And so it would be interesting to see how that plays out based on those facts.
Jarad Lucan: Yeah. I think so. And I think the important thing is, and the hard thing about the independent contractor analysis is that there are appears to be different tests applied by different government agencies, right?
Gabe Jiran: Yeah.
Jarad Lucan: And plus, whatever state you might be operating in might have its own rules as well as to whether or not someone is an independent contractor. So while this case has implications about the organizational rights of certain individuals, right? It doesn't change whether or not they're independent contractors for wage and hour standpoint, doesn't change whether they're independent contractors from an IRS standpoint, right? Or unemployment standpoint. Those are all things that every employer needs to be mindful of, right? Despite the fact that the NLRB might go back and forth on these things, there are some pretty consistent tests under other laws and other agencies that you have to be mindful of. Again, when we're talking about here is whether or not these group of makeup artists, wig artists, and hair stylists have the ability to organize, right? And further their rights under the act.
Gabe Jiran: Yeah. And that's an important point. I think I can say in, in just real general non-legal terms that the presumptions that people are employees rather than independent contractors. And then if you can establish otherwise then whether it's for tax purposes or for the department of labor or whatever, then maybe you can, but this to me, it's interesting because it represents yet another sort of vacillating position on what the legal standards are, which is really frustrating for everybody involved.
Jarad Lucan: Yeah.
Gabe Jiran: And in the end, would it be the most earth shattering decision as far as if these stylists were independent contractors or employees? Probably not. But I think the issue is what we're seeing is that there's just these seismic changes in, in NLRB case law. Is that common?
Jarad Lucan: Yeah. That is the frustrating thing, right? Particularly for employers. And it is unfortunately common, right? Because again, depending on the labor board itself is made up of political appointees, right? And so when a certain administration, whether it be Democratic or Republican is in power from the presidency standpoint, then we see these shifts every four or eight years about whether or not certain, in this case, independent contractors or employees or not, or certain handbook rules violate the act or not, or whether or not union should have greater access to their employees or not including their email systems and things of that nature, right? Whether or not certain conduct is protected concerted activity, or whether it's something that can be punished, right? By the employer. And so every four to eight years, employers are left in this position, if there is a change in the administration of well, is what I've been doing for the last four, eight years okay? And so that's why you see, decisions coming out. And if there's an overlap between when a decision was first decided, right? And then the administration change and someone filing a petition for review or any kind of review process, what's going apply, right? The new position or not? So unfortunately it is common and we see it a lot, but it does, I think the fear, as I indicated before, right? Is that there's really no consistency, right? Or sort of way of knowing whether or not you're doing the right thing, at least in the NLRA context, as it relates to either employees in this context or independent contractors, and it's becomes a difficult thing to manage.
Gabe Jiran: Yeah. I think one thing we can say with certainty is that, that GC memo came out, I think in August, these cases, these decisions that we're referring to, about the Stericycle and The Atlanta Opera, one was issued January of 2022, the other one was December, the end of December, 2021. That's pretty quick action. I think, to follow up on what the initiatives are in that General Counsel memo. So we're seeing it quickly. That's from August to December, January is not really a long period of time to get a published decision.
And now we have this, submission of briefs and so we'll have something else that comes out, out of that. But I think that employers should pay attention. [laughs]. Because there's no doubt going be many other cases.
Jarad Lucan: I agree. And then I think in the context of independent contractors, right? The test has changed now twice in eight years, right? So-
Gabe Jiran: Yeah. It's amazing.
Jarad Lucan: ... The idea that it's going to stay the same, I think is probably unlikely. And so the idea the thought is then does it go back to this FedEx case, right? From 2014, or does it go to something totally different that employers now have to deal with? And, keep in mind, we're already in 2022, right? So there's, the next two years will go by quickly and then we'll see what happens. So-
Gabe Jiran: Reverting back to a prior decision and the progeny of that decision seems a little bit easier, you know-
Jarad Lucan: Sure.
Gabe Jiran: ... rather than the whole new standard to learn, but I love to see what they do. I think you're right that the request for public comments, so to speak through briefing opens up the door, that they could consider something totally different. And if it were a meshing of different concepts to come up with new standard, that's great. It creates a lot of work for employers and for labor attorneys out there on both sides of defense, but, it's an interesting development it's in some ways, I think law should evolve to the situations, but on other hand, we should have some value and precedent. It seems like at the NLRB, precedents only worth the date on the calendar.
Jarad Lucan: Yeah. And I think, it's important to note, at least on the independent contractor, right? This idea of whether it goes to something else, or it goes back to a decision it's likely to go back to the decision, given that the chairperson at the moment, with a dissenting member of the board, when the super shuttle case came out, right? Overruling that FedEx-
Gabe Jiran: Oh, interesting. [laughs].
Jarad Lucan: ... It is possible that although the request for briefs asked, is there something else we should be considering? It's more likely than not that they're going go back to an old standard, which the current chair would have followed in the super shuttle decision rather than overturning it.
Gabe Jiran: That, that's a very interesting point. So there's one of the case I wanted to hit on is a Starbucks case that has to do with union organization, which I thought was interesting. It was a union was trying to organize employees, a Seattle Starbucks. And there was a challenge by Starbucks to say the union couldn't focus on that one coffee shop alone, that they actually had to look at more than one coffee shop. And the reason being was that employees had often worked in multiple different locations. And so Starbucks was saying, you have to look at more than one location because just to fragment out this one shop, doesn't make a lot of sense."
At my senses there was another purpose for that argument from Starbucks. What do you think?
Jarad Lucan: Yeah. So I think, again, this is that shift that we see, right? So for a while we were talking about these micro units, right? And whether or not a smaller bargaining unit is the most appropriate unit to be organized, or is there a unit that should also encompass more folks, right? Whether it be from, in this context, other Starbucks locations or not, whether or not the, that Starbucks, we don't know why Starbucks would make the argument. Other than that, it's likely harder to organize a larger group of people, right? It's harder to organize for unions, particularly if it's different locations because there's different, there's different people going back and forth. It's harder to make sure that you can secure the votes for that 50% or even the 30% showing to get the petition, right? Versus a known sort of commodity of it's this one store, it's these people here, and I know what's going on.
And so my guess is that, from a Starbucks standpoint, they want a bigger unit because they think that they can convince folks at the other stores that might be, part of that unit, that they don't need a union, right? And it might be harder for that union who either knows someone in the current store or has a relationship to get the votes that they need to, again, whether or not the ability for, this labor board is going to look at that issue again, right? Whether or not these smaller units are appropriate, right? And we're not talking about the most appropriate, but whether it's an appropriate bargaining unit or not, is there a commonality of interest among the folks that are being organized, right? They don't include supervisors or other people that shouldn't be in the act. And although there might be another appropriate unit, this unit is fine.
Gabe Jiran: Yeah. It's interesting. One thing I've learned over the years with elections is that both parties know where their votes are. [laughs]. So whether you're the union or whether you're the company, you're trying to define the unit in a way that's can be most beneficial to whatever position you're taking. Here, from a practical standpoint, I can understand Starbucks interest in trying to combine different stores, because think about it, God, there must be a million Starbucks locations-
Jarad Lucan: Sure.
Gabe Jiran: ... out there under this decision where they allowed this single store unit to go forward. Theoretically could have a different bargaining contract, a different union at any location, which that's a tough one.
Jarad Lucan: Yeah. And it's hard. I don't know all the specifics about the case, right? But when we're talking about any kind of large employer like that, particularly one that might have franchises or franchisees, there's always the concern of the joint employer issue, right? And so-
Gabe Jiran: Oh, yeah.
Jarad Lucan: ... we need to, each employer needs to make that argument of what how expansive do they want to be? Where all of a sudden they might be an employer of employees they don't want to, because they're arguing for this bigger unit. I don't know that's the case in Starbucks, but it is something to be certainly aware of. Because that's another hot button issue that's going be looked at, right? We had this sort of pendulum swing again about whether or not some, e- employers would be considered joint employers, right? One decision under the Obama administration being more encompassing about whether individual, whether two companies could be a joint employer of employee to one that was more towards the direct sort of oversight of employees versus indirect oversight and the Trump administration, and I think that's another issue that we're going see is going be, come before this board, right? And try to switch that pendulum back to where it was before.
Gabe Jiran: Yeah. I guess for employers, when, if they're faced with an organizing campaign, they're going have to consider those issues. Particularly I was thinking about Starbucks because the bit I read about it from the fascial background is that employees do work at different stores and different times. And so it's okay, so if you have this one store that's been unionized and then that employee goes to work at another store, are they in their union capacity when they work at the other store, does that therefore not open up the other store to be covered by the unit from the store that's been unionized? It, it poses more of [inaudible 00:26:45].
Jarad Lucan: And that's where that joint employer issue becomes right? That, you might have a location that's not unionized that might have to adopt the collective bargain agreement of another unit or another location because it's one employer, right? And all the, and particularly if the employees are interchangeable like that, it might become an issue.
Gabe Jiran: Yeah. I think the Starbucks case is another example where the path of the NLRB and they, this has been said is going take a more pro-labor path. And so in this situation, it would make it easier for the employees at the one location to unionize rather than have to organize, multiple different locations. And so I think this is just another indication of that initiative or that, that view of the labor board, which, look, that happens in every administration. They further their own political agendas through the NLRB. And, the employers and the unions that are involved in these just have to adopt it.
All right, well that, wraps up the cases we wanted to talk about today. There will be many more and we'll probably have another podcast and I'm hoping Jarad will join me for that as well. But, in the coming months, as there are bigger developments from the NLRB or more guidance from the General Counsel we'll certainly update you on that. For those of you that missed the first part of our series that I alluded to earlier, you can still listen to that. It's on our website, @shipmangoodwin.com/podcast. So we'll wrap it up. Thanks again, Jarad, for joining me.
Jarad Lucan: Absolutely my pleasure.
Gabe Jiran: And thanks all to our audience for listening. And we hope to see you soon.
Thank you for joining us on this episode of, From Lawyer to Employer: A Shipman Podcast. This podcast is produced and copyrighted by Shipman and Goodwin LLP all rights reserved. The contents of this communication are intended for informational purposes only, and are not intended or should not be construed as legal advice. This may be deemed advertising under certain state laws, subscribe to our podcast on Spotify, Apple Podcast, Google Podcast, or wherever you listen. We hope you will join us again.
Gabe Jiran: Welcome back to from Lawyer to Employer: A Shipman Podcast. I'm your host, Gabe Jiran, and I'm happy to bring you part two of our series regarding the National Labor Relations Board. In part two, I have my colleague and partner, Jarad Lucan here with me.
Jarad Lucan: Good afternoon, Gabe. Thanks for having me again.
Gabe Jiran: Of course. So in part one, we talked about what the General Counsel from the NLRB had established as initiatives or goals for the next four years or so. And today we're going talk about actual decisions, a couple of which actually touch on some of those initiatives. And so it may be of interest to you to see how this is actually happening in real life. One really hot topic for employers has been their work roles or their policies and handbooks, as we said in the first part of this podcast, that is something that's been a little bit of a pendulum swinging back and forth, but Jarad my understanding is there's actually a case out there that may change some standards.
Jarad Lucan: Yes, so there's a Stericycle case, right? Which, right now the Labor Board has asked for briefs on, amicus briefs, to determine whether or not the current standard that is applied to facially neutral workplace rules, such as confidentiality rules, non-disparagement rules, workplace sort of courtesy rules should be analyzed in a way that is different than what we are currently doing now, based on the Boeing case, that was decided a few years back under the previous Administration board. And so what this case is really looking at in particular, in this case, what the issues were, had to deal with personal conduct rules, conflicts of interest rules and confidentiality and harassment complaints. And these are all facially neutral rules, right? They're not rules that clearly apply to union activity. They're not rules that clearly were put in place because of a union organization effort or because employees were engaging in Section VII rights.
The real question is, do these rules on their face, violate the act, right? When applied to a certain situation, the current standard sets forth in the Boeing case, and then cases after that LA Specialty Produce, which was decided in 2019, the way in which the board currently is analyzing these facially neutral rules, looks at the nature and extent of the potential impact on an NLRA rights. Section VII rights for employees and the legitimate justification for the rule, right? Why did the employer implement the rule in the first place? And by doing so, the labor board then looks at three different categories of rules, right? Rules, which are lawful to maintain, right? That the rule is reasonably interpreted, doesn't prohibit or interfere with Section VII rights. And there's a clear justification for it. Those are category one rules, right? Then there's these category two rules, which will include rules that warrant individual scrutiny to decide whether or not they violate the act or not, right? So they're not these sort of rule one per se, okay rules.
And then there's category three rules, which include rules that the board will designate as unlawful to maintain because they clearly prohibit or limit section seven protected conduct. And the adverse impact on those rights outweighs the justification form, right? There's no real reason for it. And so that's the analysis that we have in place. Now, what this Stericycle case is looking to accomplish is, should the board continue to adhere to that standard that we just walk through? Or is a return to a much more, I would say, employee potentially union friendly standard, more appropriate. And when we talk about what that standard might be, it's this standard that dates back to 2004 from a Lutheran Heritage Village case. And again, we're talking about facially neutral rules, right? But under that case, what we were looking at in term to determine whether or not a facially neutral rule would violate the NLRA, is, would that rule be reasonably construed to violate section seven activity? So would an employee, could he reasonably construed it to violate Section VII activity?
So confidentiality rules might clearly apply to proprietary information or financial records or things of that nature, but would a reasonable employee look at that and say, "Oh that means I can't talk about my discipline, or I can't talk about my rate of pay." there's obviously a way of going back and forth, right? A reasonable employee wouldn't think that in the context of what the employer or a reasonable employee could look at it that way. So it was a very objective test versus the sort of categorical tests that we have now.
Gabe Jiran: Yes. And I can remember back under that standard, it caused us fits as labor attorneys, because I can remember one, there was a General Counsel memo that actually, I think there were a series of them under that standard. And you would read these policies that they've held were just fine and some had been invalidated. And it was really hard to get some consistency because, frankly, I would look at some and say, "There's no way that rule's going stand up," and it was fine. And then others were like, "I don't get it. I don't see how you come to that conclusion."
Jarad Lucan: Yeah. It's difficult to manage, right? It was difficult for all employers to know whether or not they should have these rules or not, or whether they should be putting in clarifying caveat language in, that we have this rule, but if you have to gauge an activity under the NLRA, it doesn't apply to that. Which sort of signals that there's this other, underdog that you should be engaging under, but you're right. There were a slew of case laws over the past decade or so. And general counsel memos and memos that dealt with certain provisions and whether or not they violated the NLRA or not. And to be fair, not many of them were consistent on whether or not they did or didn't. And sometimes it mattered what the provisions were surrounding that one provision say, right? In order to determine the context of this rule, it is clearly not going prohibit or a reasonable person wouldn't read this if they read everything right? But if they didn't read everything, maybe it does. And so it was this amorphous way of deciding whether or not something was, or a very vague way of deciding whether or not a handbook or policy violated the act.
Gabe Jiran: Yeah. I think anytime you have the reasonable person standard it's, the person who's deciding what a reasonable person would think is actually the one deciding what a reasonable person would think. And so I know from those prior cases you spoke of, like I said, there were a couple where you said, I don't think a reasonable person would really conclude that they're prohibited from doing certain things, but it the problem is becomes very ad hoc because it's hard to create standards or consistency when you're applying that standard. But look, the reasonable person standard is not a foreign concept we have in all areas of the law. And I get it, why they might go back to that. But I guess the bigger question is because the NLRB has asked for others to weigh in on this-
... Is that like some indication they're going change?
Jarad Lucan: And that's a great point because it's not specific that they'll go back to that way. The Lutheran heritage standard, right? There might be some other standard that they're looking at. And so they might be looking for creative ideas on how to address these things from both employer and employee side representatives. That's the whole point of it though. It's not clear about where we're going to end up on any of this, but I think some of the fears, and if we, look at some of the dissenting members, because again, this comes from a request for a review of a decision, right? And whether or not that I think there's some fear from other members or dissenting members of the board, at least that this is going to be an opportunity to undo, right? That precedent and go back to that more reasonable person standard as opposed to a categorical standard. But maybe there is some other avenue that the board will go down. It's just unclear at the moment.
Gabe Jiran: Yeah. Like maybe some sort of middle ground or something.
Jarad Lucan: Sure.
Gabe Jiran: So for all the employers out there that are listening, keep your eyes on this one. We obviously will, post things once a decision is made, but as it stands right now, anybody that wants to file a brief can do so by March 7th, 2022, and then they'll make a decision thereafter. I don't know. I would expect we'd get a decision mid to late 2022 on this one, depending on what kind of backlog they have. But it would be definitely one to watch because all employers will need to look at their policies because, we've revised many policies over the past decade in order to make sure that we're complying with the National Labor Relations Act. If this imposes some new standard, then we have to go back and look at the policies. That's obviously going be a big project for employers.
Jarad Lucan: Yeah. I think the big fair for most employers on this issue is that if anything, the Boeing standard created some predictability, right? That this is what we are allowed, right? There are categorical rules that we don't have to worry about as long as we're not implementing them in the face of a unionizing campaign or whatever else. But I think the fair is the moving away from that predictability, which, the alternative to predictability is chaos. Right? [laughs].
Gabe Jiran: [laughs].
Jarad Lucan: And so we just don't know what it's going to be and it makes it difficult to manage in a workplace. So I think there is that fair, at least from an employer side of what is the alternative going to be? And is it going be something that is easy for us to manage or are we going to have to be rewriting our policies every four years?
Gabe Jiran: Yeah. I think you made a point right at the very beginning of discussing this case where it was, these are facially neutral policies. So the easy ones are ones that say you can't engage in union activity, or you can't talk about your compensation or something like that. Those are just going be struck down immediately. It's these ones that you may not think have a tie to protected activity, but really could. And one of the one we see a lot of is the social media policies and how those have developed. And, the standard really could determine how your social media policy reads.
Jarad Lucan: Or from the Boeing case, right? Recordings in the workplace, right?
Gabe Jiran: Gotcha.
Jarad Lucan: Whether or not those types of things should be categorically depending on your workplace, right? Particularly if you're a government contractor or there's some top secret things that are confidential and propriety information you need to hide. Versus maybe that rule, isn't always going to be a category one rule depending on your, the nature of your workplace. So again, that is why the Boeing rule has some predictability, right? Because the first thing that the board is looking at is the nature and extent of the potential impact on the rights and then the justification for it. So if you don't have a good justification for it as an employer, then it's particularly going get struck down. But at least it gives employers an idea of the types of rules and policies that would be arguably upheld in their workplace. Whether it be reasonably construed standard doesn't.
Gabe Jiran: Yeah. Yeah. The recording or the taking of pictures in the workplace, that's a really hot one too, because well, look in the healthcare setting, you've got patients and manufacturing, you've got potential trade secrets or processes and all of that, which are all legitimate-
Jarad Lucan: Sure.
Gabe Jiran: ... business reasons for restricting that type of activity. But then, and there, I think there was a case on this or some guidance on this previous, it was, what does the reasonable person think the reasonable employee or this saying, "If I see a safety violation that could affect other employees, am I then prohibited from taking a picture of that to document it?" And that's, I could see the nuances of that being difficult.
Jarad Lucan: Sure.
Gabe Jiran: There's another case out there that is also going be of great interest to employers. And that has to do with independent contractors. And who's going qualify as an independent contractor. This is the Atlanta Opera case. There are all sorts of tests for who's an independent contractor and who's not this one deals solely within the national labor relations act. Who's an independent contractor or not. So what's going on with that case?
Jarad Lucan: Sure. So what we're looking at here is, again, there was a just giving you how we got to the point of asking for briefs on this case, is that there was a petition for election, right? There was a regional director directed the election of the certain wig artists, makeup artists, and hairstylist as employees of the Atlanta Opera and allowing them to have an election with the NLRB whether or not they wanted to be organized or represented by a union or not. The employer filed a petition for review claiming that the regional director did not apply the proper standard for depending whether or not these individuals were independent contractors or employees. The significance of that is huge because independent contractors do not have rights under the NLRA, right? And would not have the ability well, they could try to organize, but the employer doesn't have to recognize any organization they have because they're not employees under the act.
And so the petition for review was filed, and in the context of that petition for review, the labor board is asking for briefs as to whether or not they should revisit the recent decision that I'll get into from the Trump administration board about whether or not someone is an independent contractor or not. So in 2014, there was this FedEx Home Delivery case in which the board modified arguably previous NLRB decisions, determining who's an independent contractor or not, and really limited the entrepreneurial opportunity for economic gain issue or prong of all of that and finding that those individuals were employees in that independent contractors. And then in 2019, a new administration is in place. And in a case, a super shuttle case, the Trump administration really focused more on that economic or the entrepreneurial opportunity as opposed to the economic dependency aspect of it, and tried to go back to what it said was the proper traditional common law agency test of whether or not someone is an independent contractor or employee.
And only in 2019, so three years ago, we have a case that says, this is what the proper standard is for independent contractors, right? And this goes back to what that board said was the precedent long before 2014, when it was changed. What we're seeing now, given a new administration, right? In a new sort of pendulum swing in terms of what the agenda is for cases is the labor board looking at an opportunity, right? With a case to determine whether or not someone is an independent contractor or not, and to revisit that super shuttle case and to potentially go back to the FedEx case standard, or is there some other standard again, right? To apply. And so that's where we are at the moment, right? Again, some consistency for employers for the last couple years about whether or not certain individuals would be contractors, right? Independent contractors or employees, and now an unknown. Whether or not that standard's going apply or something else in the future.
Gabe Jiran: In layman's terms, the current standard provides a greater opportunity to argue that somebody's an independent-
Jarad Lucan: Yes.
Gabe Jiran: ... contractor, right?
Jarad Lucan: Yes. Yeah.
Gabe Jiran: So we could see that, that narrowing a bit. So in this case, they've asked for briefs as well, and they were due at the beginning of February, I think February 10th.
Similar timeline will probably, they might be, it might be issued around the same time as the prior case. We'll see depending again how things move along. But this is one really for employers to watch because the independent contractor status is something that is, it's confusing to employers. I think sometimes there's a tendency to kind of, because it's easier to call somebody an independent contractor, even when they're not, but there could be consequences. There's tax consequences obviously now there's, there's obviously labor consequences if they try to organize and we'll have to see how that plays out. But, in this particular case the individuals that were involved, makeup artists, wig artists, hairstylists, and this is, we don't have all the facts in front of us, but it seems like those would traditionally be people who are hired to come in and do specific tasks, things you would think about as independent contractors. They probably do it for other productions or other opera houses or whatever. And so it would be interesting to see how that plays out based on those facts.
Jarad Lucan: Yeah. I think so. And I think the important thing is, and the hard thing about the independent contractor analysis is that there are appears to be different tests applied by different government agencies, right?
Gabe Jiran: Yeah.
Jarad Lucan: And plus, whatever state you might be operating in might have its own rules as well as to whether or not someone is an independent contractor. So while this case has implications about the organizational rights of certain individuals, right? It doesn't change whether or not they're independent contractors for wage and hour standpoint, doesn't change whether they're independent contractors from an IRS standpoint, right? Or unemployment standpoint. Those are all things that every employer needs to be mindful of, right? Despite the fact that the NLRB might go back and forth on these things, there are some pretty consistent tests under other laws and other agencies that you have to be mindful of. Again, when we're talking about here is whether or not these group of makeup artists, wig artists, and hair stylists have the ability to organize, right? And further their rights under the act.
Gabe Jiran: Yeah. And that's an important point. I think I can say in, in just real general non-legal terms that the presumptions that people are employees rather than independent contractors. And then if you can establish otherwise then whether it's for tax purposes or for the department of labor or whatever, then maybe you can, but this to me, it's interesting because it represents yet another sort of vacillating position on what the legal standards are, which is really frustrating for everybody involved.
Jarad Lucan: Yeah.
Gabe Jiran: And in the end, would it be the most earth shattering decision as far as if these stylists were independent contractors or employees? Probably not. But I think the issue is what we're seeing is that there's just these seismic changes in, in NLRB case law. Is that common?
Jarad Lucan: Yeah. That is the frustrating thing, right? Particularly for employers. And it is unfortunately common, right? Because again, depending on the labor board itself is made up of political appointees, right? And so when a certain administration, whether it be Democratic or Republican is in power from the presidency standpoint, then we see these shifts every four or eight years about whether or not certain, in this case, independent contractors or employees or not, or certain handbook rules violate the act or not, or whether or not union should have greater access to their employees or not including their email systems and things of that nature, right? Whether or not certain conduct is protected concerted activity, or whether it's something that can be punished, right? By the employer. And so every four to eight years, employers are left in this position, if there is a change in the administration of well, is what I've been doing for the last four, eight years okay? And so that's why you see, decisions coming out. And if there's an overlap between when a decision was first decided, right? And then the administration change and someone filing a petition for review or any kind of review process, what's going apply, right? The new position or not? So unfortunately it is common and we see it a lot, but it does, I think the fear, as I indicated before, right? Is that there's really no consistency, right? Or sort of way of knowing whether or not you're doing the right thing, at least in the NLRA context, as it relates to either employees in this context or independent contractors, and it's becomes a difficult thing to manage.
Gabe Jiran: Yeah. I think one thing we can say with certainty is that, that GC memo came out, I think in August, these cases, these decisions that we're referring to, about the Stericycle and The Atlanta Opera, one was issued January of 2022, the other one was December, the end of December, 2021. That's pretty quick action. I think, to follow up on what the initiatives are in that General Counsel memo. So we're seeing it quickly. That's from August to December, January is not really a long period of time to get a published decision.
And now we have this, submission of briefs and so we'll have something else that comes out, out of that. But I think that employers should pay attention. [laughs]. Because there's no doubt going be many other cases.
Jarad Lucan: I agree. And then I think in the context of independent contractors, right? The test has changed now twice in eight years, right? So-
Gabe Jiran: Yeah. It's amazing.
Jarad Lucan: ... The idea that it's going to stay the same, I think is probably unlikely. And so the idea the thought is then does it go back to this FedEx case, right? From 2014, or does it go to something totally different that employers now have to deal with? And, keep in mind, we're already in 2022, right? So there's, the next two years will go by quickly and then we'll see what happens. So-
Gabe Jiran: Reverting back to a prior decision and the progeny of that decision seems a little bit easier, you know-
Jarad Lucan: Sure.
Gabe Jiran: ... rather than the whole new standard to learn, but I love to see what they do. I think you're right that the request for public comments, so to speak through briefing opens up the door, that they could consider something totally different. And if it were a meshing of different concepts to come up with new standard, that's great. It creates a lot of work for employers and for labor attorneys out there on both sides of defense, but, it's an interesting development it's in some ways, I think law should evolve to the situations, but on other hand, we should have some value and precedent. It seems like at the NLRB, precedents only worth the date on the calendar.
Jarad Lucan: Yeah. And I think, it's important to note, at least on the independent contractor, right? This idea of whether it goes to something else, or it goes back to a decision it's likely to go back to the decision, given that the chairperson at the moment, with a dissenting member of the board, when the super shuttle case came out, right? Overruling that FedEx-
Gabe Jiran: Oh, interesting. [laughs].
Jarad Lucan: ... It is possible that although the request for briefs asked, is there something else we should be considering? It's more likely than not that they're going go back to an old standard, which the current chair would have followed in the super shuttle decision rather than overturning it.
Gabe Jiran: That, that's a very interesting point. So there's one of the case I wanted to hit on is a Starbucks case that has to do with union organization, which I thought was interesting. It was a union was trying to organize employees, a Seattle Starbucks. And there was a challenge by Starbucks to say the union couldn't focus on that one coffee shop alone, that they actually had to look at more than one coffee shop. And the reason being was that employees had often worked in multiple different locations. And so Starbucks was saying, you have to look at more than one location because just to fragment out this one shop, doesn't make a lot of sense."
At my senses there was another purpose for that argument from Starbucks. What do you think?
Jarad Lucan: Yeah. So I think, again, this is that shift that we see, right? So for a while we were talking about these micro units, right? And whether or not a smaller bargaining unit is the most appropriate unit to be organized, or is there a unit that should also encompass more folks, right? Whether it be from, in this context, other Starbucks locations or not, whether or not the, that Starbucks, we don't know why Starbucks would make the argument. Other than that, it's likely harder to organize a larger group of people, right? It's harder to organize for unions, particularly if it's different locations because there's different, there's different people going back and forth. It's harder to make sure that you can secure the votes for that 50% or even the 30% showing to get the petition, right? Versus a known sort of commodity of it's this one store, it's these people here, and I know what's going on.
And so my guess is that, from a Starbucks standpoint, they want a bigger unit because they think that they can convince folks at the other stores that might be, part of that unit, that they don't need a union, right? And it might be harder for that union who either knows someone in the current store or has a relationship to get the votes that they need to, again, whether or not the ability for, this labor board is going to look at that issue again, right? Whether or not these smaller units are appropriate, right? And we're not talking about the most appropriate, but whether it's an appropriate bargaining unit or not, is there a commonality of interest among the folks that are being organized, right? They don't include supervisors or other people that shouldn't be in the act. And although there might be another appropriate unit, this unit is fine.
Gabe Jiran: Yeah. It's interesting. One thing I've learned over the years with elections is that both parties know where their votes are. [laughs]. So whether you're the union or whether you're the company, you're trying to define the unit in a way that's can be most beneficial to whatever position you're taking. Here, from a practical standpoint, I can understand Starbucks interest in trying to combine different stores, because think about it, God, there must be a million Starbucks locations-
Jarad Lucan: Sure.
Gabe Jiran: ... out there under this decision where they allowed this single store unit to go forward. Theoretically could have a different bargaining contract, a different union at any location, which that's a tough one.
Jarad Lucan: Yeah. And it's hard. I don't know all the specifics about the case, right? But when we're talking about any kind of large employer like that, particularly one that might have franchises or franchisees, there's always the concern of the joint employer issue, right? And so-
Gabe Jiran: Oh, yeah.
Jarad Lucan: ... we need to, each employer needs to make that argument of what how expansive do they want to be? Where all of a sudden they might be an employer of employees they don't want to, because they're arguing for this bigger unit. I don't know that's the case in Starbucks, but it is something to be certainly aware of. Because that's another hot button issue that's going be looked at, right? We had this sort of pendulum swing again about whether or not some, e- employers would be considered joint employers, right? One decision under the Obama administration being more encompassing about whether individual, whether two companies could be a joint employer of employee to one that was more towards the direct sort of oversight of employees versus indirect oversight and the Trump administration, and I think that's another issue that we're going see is going be, come before this board, right? And try to switch that pendulum back to where it was before.
Gabe Jiran: Yeah. I guess for employers, when, if they're faced with an organizing campaign, they're going have to consider those issues. Particularly I was thinking about Starbucks because the bit I read about it from the fascial background is that employees do work at different stores and different times. And so it's okay, so if you have this one store that's been unionized and then that employee goes to work at another store, are they in their union capacity when they work at the other store, does that therefore not open up the other store to be covered by the unit from the store that's been unionized? It, it poses more of [inaudible 00:26:45].
Jarad Lucan: And that's where that joint employer issue becomes right? That, you might have a location that's not unionized that might have to adopt the collective bargain agreement of another unit or another location because it's one employer, right? And all the, and particularly if the employees are interchangeable like that, it might become an issue.
Gabe Jiran: Yeah. I think the Starbucks case is another example where the path of the NLRB and they, this has been said is going take a more pro-labor path. And so in this situation, it would make it easier for the employees at the one location to unionize rather than have to organize, multiple different locations. And so I think this is just another indication of that initiative or that, that view of the labor board, which, look, that happens in every administration. They further their own political agendas through the NLRB. And, the employers and the unions that are involved in these just have to adopt it.
All right, well that, wraps up the cases we wanted to talk about today. There will be many more and we'll probably have another podcast and I'm hoping Jarad will join me for that as well. But, in the coming months, as there are bigger developments from the NLRB or more guidance from the General Counsel we'll certainly update you on that. For those of you that missed the first part of our series that I alluded to earlier, you can still listen to that. It's on our website, @shipmangoodwin.com/podcast. So we'll wrap it up. Thanks again, Jarad, for joining me.
Jarad Lucan: Absolutely my pleasure.
Gabe Jiran: And thanks all to our audience for listening. And we hope to see you soon.
Thank you for joining us on this episode of, From Lawyer to Employer: A Shipman Podcast. This podcast is produced and copyrighted by Shipman and Goodwin LLP all rights reserved. The contents of this communication are intended for informational purposes only, and are not intended or should not be construed as legal advice. This may be deemed advertising under certain state laws, subscribe to our podcast on Spotify, Apple Podcast, Google Podcast, or wherever you listen. We hope you will join us again.