The top three stories in National Labor Relations Board (NLRB) news in recent weeks include (1) a decision holding that the misclassification of workers does not constitute an independent violation of the National Labor Relations Act (NLRA), (2) a ruling on mandatory arbitration agreements in the wake of recent U.S. Supreme Court precedent and (3) the Board requesting input on the level of protection that should be applied to profane outbursts and offensive statements by employees.
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Incorrect classification does not equal violation. First up, a majority of the Board held that misclassifying an employee as an independent contractor does standing alone, violate the NLRA if the employer’s opinion turns out to be mistaken.
Jeannie Edge, a driver for Velox Express, a medical courier service, alleged that the company violated the NLRA by discharging her and in misclassifying its drivers as independent contractors, as opposed to employees.
An administrative law judge (ALJ) found that the drivers were employees under the NLRA and that Velox violated Section 8(a)(1) by discharging Edge and misclassifying her. On appeal, the Board asked the parties and interested amici to weigh in on under what circumstances, if any, it should deem an employer’s act of misclassifying statutory employees as independent contractors a violation of the NLRA.
After considering the input, a majority of the Board determined that while such misclassification could result in a statutory violation, that conclusion isn’t automatic.
“An employer’s mere communication to its workers that they are classified as independent contractors does not expressly invoke the Act,” the NLRB wrote. “It does not prohibit the workers from engaging in Section 7 activity. It does not threaten them with adverse consequences for doing so, or promise them benefits if they refrain from doing so. Employees may well disagree with their employer, take the position that they are employees and engage in union or other protected activities. If the employer responds with threats, promises, interrogations and so forth, then it will have violated Section 8(a)(1), but not before.”
Reasonable minds can—and often do—disagree about independent contractor status when presented with the same factual circumstances, the Board said, and the NLRA is not the only relevant law when making such an assessment.
“[W]e decline to hold that an employer’s misclassification of its employees as independent contractors, standing alone, violates the Act,” the NLRB concluded.
Although it affirmed the ALJ’s conclusion that Velox did violate the statute when it terminated Edge, the Board reversed with respect to the judge’s finding that the company violated the Act by misclassifying its drivers as independent contractors.
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Arbitration agreement clarification. Last year, the Supreme Court held in Epic Systems Corp. v. Lewis that agreements containing class and collection action waivers and stipulating that employment disputes are to be resolved by individualized arbitration do not violate the NLRA and must be enforced as written pursuant to the Federal Arbitration Act.
Answering multiple questions that came up in the wake of Epic Systems about the lawfulness of employer conduct surrounding mandatory arbitration agreements, the NLRB ruled that employers are not prohibited under the NLRA from informing employees that failing or refusing to sign a mandatory arbitration agreement will result in their discharge.
Further, the decision in Cordua Restaurants, Inc. explained that employers are not prohibited under the statute from promulgating mandatory arbitration agreements in response to employees opting into a collective action under the Fair Labor Standards Act or state wage and hour laws.
“Because opting into a collective action is merely a procedural step required in order to participate as a plaintiff in a collective action, it follows that an arbitration agreement that prohibits employees from opting into a collective action does not restrict the exercise of Section 7 rights and, accordingly, does not violate the Act,” the Board wrote.
Employers may not take adverse action against employees for engaging in concerted activity by filing a class or collective action, however, the NLRB said.
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Profane, offensive statements reconsidered. Finally, the Board requested briefing on whether it should reconsider its standards for profane outbursts and offensive statements of a racial or sexual nature.
Under the current standard set forth in Atlantic Steel, the NLRB uses a four-part test as to whether employees lose protection of the Act based on the location of the discussion, the subject matter of the discussion, the nature of the employee’s outburst and whether the outburst was provoked by the employer’s unfair labor practice.
The case at issue involves Charles Robinson, an employee at General Motors who while in his role as union committeeperson used a great deal of profanity while discussing overtime support for employees engaged in cross-training. Applying the four-part test, the ALJ found that Robinson’s first outburst did not lose the protection of the Act but that his two subsequent profane statements lost statutory protection.
On appeal, the Board asked for help, noting that its treatment of such language “has been criticized as both morally unacceptable and inconsistent with other workplace laws.” Mindful of the criticism, the NLRB invited stakeholders to file briefs to reconsider the standard.
Specifically, the Board asked under what circumstances profane language or sexually or racially offensive speech should lose the protection of the Act, if the “norms of the workplace” (such as whether profanity is commonplace and tolerated) should be considered and what relevance the NLRB should accord to antidiscrimination laws such as Title VII when considering whether an employee’s statements lose protection of the NLRA.
Amicus briefs in the case will be accepted until November 4, 2019.
To read the decision and order in Velox Express, Inc., click here.
To read the decision and order in Cordua Restaurants, Inc., click here.
To read the notice and invitation to file briefs in General Motors LLC, click here.
Why it matters: The NLRB had a busy month, issuing major decisions in favor of employers on issues including the misclassification of independent contractors (not a violation of the NLRA standing alone) and mandatory arbitration agreements (not only can employers inform their employees that the failure to sign the agreement can result in discharge, but they can also draft agreements in response to employees opting into a collective action). Additional changes may also be coming with the Board’s reconsideration of the standard for when an employee’s profane or offensive language loses the protection of the Act.
