NLRB Delivers Crushing Blow to Small Businesses

Home Builders Especially Affected

In a long-awaited, 3-2 decision, the National Labor Relations Board (NLRB) changed the well-established standard for determining whether two separate and independent companies are joint employers under the National Labor Relations Act. The case is Browning –Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery.

BFI Newby Island Recyclery owned and operated a recycling facility and it contracted with Leadpoint Business Services to provide workers to help sort materials inside the facility. The relationship between BFI and Leadpoint was governed by a temporary labor services agreement. The issue in the case was whether BFI and Leadpoint were joint employers of the sorters, screen cleaners, and housekeepers that Leadpoint provided to BFI.

For the past 30 years the NLRB has held that whether an otherwise independent company was a joint employer turned on whether the company retained for itself sufficient control of the essential terms and conditions of employment of the employees employed by the other employer.

A key element of that determination was whether the company exerted “direct and immediate control over employment matters of the other entities’ employees.” The board’s focus was on whether the joint employer meaningfully affected matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.

In finding that BFI was a joint employer, the NLRB applied a new standard that eliminates the requirement that the employer actually exercise the authority to control. Now, the right to control will not be considered in determining joint-employer status.

As a result, direct, indirect (e.g., through an intermediary), and potential control over working conditions are all relevant to the joint-employer inquiry.

Examples include dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance.

The dissenting members of the board criticized the expanded standard, arguing that it abandoned a longstanding test that provided certainty and predictability. They predicted that it would subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity.

The National Association of Home Builders is an executive committee member of the Coalition to Save Local Businesses, which was successful in including appropriations riders in both House and Senate appropriations measures to block the NLRB from investigations on an expanded joint employer standard. Because the appropriations strategy is not a guaranteed success — the President’s signature is necessary on the final bill — your Home Builders Association will support soon-to-be introduced bicameral legislation that will protect the NLRB’s traditional joint employer definition.

We ask all members to encourage their Representatives and Senators to support this legislation upon Congress’ return in September.

The case is Browning-Ferris Industries of California Inc., et al v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, Case number 32-RC-109684.

Statement by Tom Woods, Chairman, National Association of Home Builders
Tom Woods, Chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Mo., issued the following statement on the National Labor Relations Board’s (NLRB) decision in the Browning-Ferris case that will expand the definition of a joint employer.

“The decision by the NLRB to expand the definition of a joint employer not only delivers a huge blow to businesses across the country who rely on the work of sub-contractors, by threatening a business owner’s control of their own company, but it is also bound to have a chilling effect on the overall economy and job growth.

“The NLRB abandoned a standard that has been recognized for decades, and expanded the definition of a joint employer to now hold businesses liable for workers they do not even employ, potentially even putting them on the hook for legal ramifications. The new standard no longer requires that a business ‘directly and immediately’ control a workforce run by another business, to be named a joint employer, but rather expands the definition to include indirect control.

“The home building industry, which is primarily made up of small businesses who rely greatly on the work of sub-contractors would overwhelmingly be harmed by the new standard. Building a home requires the work of multiple specialty trade contractors such as roofers, electricians and framers, but these small builders can’t afford to have a large full-time staff to include all of these trades, so they contract with specialty trades based on project needs. With the NLRB’s recent decision, these small businesses would now be subject to unprecedented Board jurisdiction. The overall construction sector is made up of more than two million individual proprietorships, all of whom would be subject to this new rule.“If this ruling is allowed to stand, it will cripple small businesses across the country, including the home building industry as it is in its fragile recovery. NAHB intends to continue its fight against this regulatory overreach, and put the control back in the hands of small businesses.”

NLRB Issues Final Rule on ‘Ambush’ Union Election Rules

The National Labor Relations Board has issued its final rulemaking that that would dramatically speed up union elections, reduce the time workers have to decide whether or not to join a labor union and force employers to hand over to union organizers their employees’ private information.

Under the rule, employers could have as little as 10 days to hire a lawyer and prepare for an election hearing, which would give unions a tremendous advantage in their efforts to organize employees. The rule will be published in the Federal Register on December 15, and will take effect on April 14, 2015.

NAHB strongly opposes this controversial “quickie election” rule and will continue to work with Congress to prevent it from going forward. Specifically, NAHB is concerned this rule will make it very difficult for employers to retain counsel and have sufficient time and opportunity to prepare for an election. House bills introduced in the 113th Congress (H.R. 4320 and H.R. 4321) would prevent the NLRB from accelerating the union representation election process.

In addition, NAHB is part of the Coalition for a Democratic Workforce, which has announced that it will sue the NLRB to invalidate the newly released rule that would pave the way for unfair and illegal “ambush” elections.

NAHB: Court Strikes Down NLRB “Poster Rule”

In a victory for NAHB, the U.S. Court of Appeals for the District of Columbia on May 7 struck down a National Labor Relations Board (NLRB) rule that would have required millions of employers across the nation to place 11-inch by 17-inch posters in a prominent area in their workplace that informs employees of their right to form a union.

The court ruled that the NLRB overstepped its authority when it issued the poster rule, which deemed failure to display the required notice an unfair labor practice. The decision stated that the NLRB lacked authority to promulgate such a rule because Section 8(c) of the National Labor Relations Act provides that the dissemination (or non-dissemination) of non-threatening speech shall not be considered an unfair labor practice.

NAHB is a member of the Coalition for a Democratic Workplace, which was a party to the case. NAHB and other business organizations maintain that the poster rule violated free speech rights and amounted to little more than advertisements for union membership.

Federal Judge Strikes Down “Ambush” Union Election Rule

When Woody Allen once said that “80% of life is just showing up,” he never dreamed his statement would be the basis for a federal judge to strike down a National Labor Relations Board (NLRB) ruling on union elections.

But that’s exactly what happened last week.

In a victory for NAHB and small businesses across the nation, U.S. District Judge James Boasberg on May 14 declared a new rule put forth by the NLRB to accelerate the union representation process is “invalid.”

At issue is the “ambush” election rule that would dramatically shorten the amount of time for an employer to organize a response to attempts to employees to unionize. Whereas previously an employer would have up to six weeks to prepare for a union election, the NLRB’s new procedure would compress the current average time from moving from petition to organize a union down to as little as 10 days.

The U.S. Chamber of Commerce filed a legal challenge seeking to overturn the NLRB rule, which went into effect on April 30.

Boasberg struck down the rule because only two members of the NLRB participated in the rulemaking vote, which was short of the three-person quorum needed to issue the new regulation.

In his ruling, Boasberg said: “According to Woody Allen, 80% of life is just showing up. When it comes to satisfying a quorum requirement, though, showing up is even more important than that. Indeed, it is the only thing that matters – even when the quorum is constituted electronically. In this case, because no quorum ever existed for the pivotal vote in question, the Court must hold that the challenged rule is invalid.”

Two Democratic NLRB members participated in the decision to adopt the rule but the board’s third member, Republican Brian Hayes, who was adamantly opposed to the rule, did not cast a vote. Since Hayes had previously voted against initiating the rulemaking and against proceeding with the drafting and publication of the final rule, the NLRB nevertheless determined that he had “effectively indicated his opposition.”

Since the court invalidated the rule for a lack of a quorum, it did not reach a decision based on the legality of the rule. So, the NLRB could again consider adopting this rule at a future date.

NAHB, the U.S. Chamber of Commerce and other organizations had previously urged Congress to overturn the rule, arguing that it would deprive employers of proper due process and deny them sufficient time to educate workers about the effects of unionization in the workplace.

Last month, NAHB sent a letter to senators in support of S. J. Res. 36, a resolution introduced by Sen. Mike Enzi (R-Wyo.) that would have prevented the rule from going into effect under the Congressional Review Act. The resolution failed on a near-party line vote.

NAHB will continue to work with Congress and business groups to keep the NLRB rule from going into effect.

To view the resolution, click here and type S. J. Res. 36 in the box in the upper center screen.

For more information on the legal ruling, email David Crump at NAHB or call him at 800-368-5242 x8491.

For more details regarding the congressional outlook on this issue, contact Suzanne Beall at x8407.

NLRB Poster Rule suspended, again

The saga of the on again, off again NLRB Poster Rule has taken another turn, and this time South Carolina businesses played an active role.

The controversial rule requires employers to prominently display a poster advising workers of their right to unionize.  It was set to go into effect on April 30 after a brief delay resulting from previous court challenges.  But a challenge in U.S. District Court for South Carolina has resulted in suspension of NLRB’s controversial proposed rule.

On Friday, April 13, 2012, the U.S. District Court for South Carolina, in a case brought by the U.S. Chamber of Commerce, ruled that the National Labor Relations Board (NLRB) exceeded its authority in adopting a rule requiring employers to post an employee notice of collective bargaining rights.

Judge David C. Norton held that the NLRB’s authority is limited to adjudicating unfair labor practices, and that Congress did not impart the agency with authority to compel employers to post labor rights notices.

This decision has created a split among jurisdictions, as just last month, the U.S. District Court for the District of Columbia ruled in a case brought by the National Association of Manufacturers (NAM) that the NLRB had the authority to promulgate the rule, but that failure to comply with the rule did not by itself constitute an unfair labor practice or serve to toll the statute of limitations for filing an unfair labor practice complaint. NAM has filed for appeal in this case.

Following on the heels of the South Carolina decision, on Tuesday, April 17, the United States Court of Appeals for the District of Columbia granted a temporary injunction blocking implementation of the rule pending the appeal filed by NAM. The poster rule had been scheduled to go into effect on April 30, 2012, but this is no longer the case.

The injunction stays the implementation, and employers nationwide will not have to post the collective bargaining rights poster, pending the outcome of this appeal.

NAHB continues to monitor all events concerning the poster rule and provide notification to HBA members regarding future rulings.  For more information about the poster rule, visit