Court Slaps Down Overreach of Federal Labor Regulators

Recent research finds that the National Labor Relations Board (NLRB), the agency that governs most private-sector labor relations, overturned decisions representing over 4,500 years of precedent under the Obama administration. That is a big deal. Without the stability that comes from respecting precedent, it is extremely difficult for all parties to understand the rules of the game and conduct business.

Even though NLRB policy is known to swing like a pendulum depending on which party holds the executive office, Obama’s Board was one of the most political in history. During the Obama administration, the NLRB acted as the litigation arm of Big Labor and dramatically tilted the labor relations rules in favor of unions over worker choice and employers.

President Trump, hopefully soon, will fill two vacancies at the NLRB, which should bring back some semblance of balance and fairness to labor relations. However, Obama appointees still comprise a majority of the Board and are still making decisions with a pro-union bias. Moreover, many NLRB decisions are still progressing through the federal court system.

Just in the first few weeks of March, the D.C. Circuit Court of Appeals decided three cases that call out the NLRB for overturning precedent without any rationale for doing so, abusing its discretion in imposing orders, and bringing frivolous cases to the court.

On March 3, in FedEx v. NLRB, the D.C. Circuit decided that FedEx single route drivers in Hartford, Connecticut are independent contractors, not employees under the National Labor Relations Act. In the decision, the court vacated the NLRB’s order that certified the Teamsters as the drivers’ representative.

This decision should not surprise the NLRB. In 2009, the D.C. Circuit made the same determination in a separate case involving FedEx, which, as the NLRB agrees, had a “materially indistinguishable factual record.”

In the 2009 FedEx case, the court applied the common law agency principles—a 10-point test that is non-exhaustive. The test focuses on the control the employer has over the worker, skill necessary to complete the job, ability of worker to suffer gain or loss, and the length of the job among, other criteria. The D.C. Circuit concluded in 2009 that the facts of the case favor classifying the drivers in question as independent contractors rather than employees.

In essence, the NLRB wasted taxpayer funds and the employer’s time and money by litigating this case. Somehow, the Board believed that they could bring the same case to the same court and get a different answer. As the saying goes, “the definition of insanity is doing the same thing over and over again, but expecting different results.”

The D.C. Circuit says as much in its decision:

It is as clear as clear can be that “the same issue presented in a later case in the same court should lead to the same result… Doubly so when the parties are the same. This case is the poster child for our law-of-the-circuit doctrine, which ensures stability, consistency, and evenhandedness in circuit law. Having chosen not to seek Supreme Court review in FedEx I, the Board cannot effectively nullify this court’s decision in FedEx I by asking a second panel of this court to apply the same law to the same material facts but give a different answer.

In another March decision issued by the D.C. Circuit, the NLRB was rebuked for encroaching on the Railway Labor Act’s (RLA) jurisdiction and breaking precedent without “offering a rationale for its new approach.”

In ABM Onsite Services v. NLRB, the issue at hand was whether airport baggage workers in Portland, Oregon fall under the jurisdiction of the NLRA or RLA, the labor relations law that covers railway and airline employees.

In 2015, the International Association of Machinists (IAM) filed a petition to represent employees at ABM Onsite Services who ensure that airline passengers’ bags get from the ticket counter to their final destination.

Normally the NLRB would request an advisory opinion from the National Mediation Board (the agency that enforces the RLA) to determine whether these airline employees fall under the jurisdiction of the NLRA or the RLA. This has been established policy since 1956.

The NLRB bucked precedent, however, and ruled it had jurisdiction, certifying the IAM as the exclusive representative of the employees without ever consulting with the Mediation Board.

In the D.C. Circuit decision, they criticize the NLRB’s departure from precedent:

This case turns on the fundamental principle that an agency may not act in a manner that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(a). The NLRB has violated that cardinal rule here by applying a new test to determine whether the RLA applies, without explaining its reasons for doing so. Because an agency’s unexplained departure from precedent is arbitrary and capricious, we must vacate the Board’s order.

In the third D.C. Circuit court decision, the NLRB is rebuked for going overboard on imposing an overly burdensome order on an employer.  

In Scoma’s of Sausalito v. UNITE-HERE, a seafood restaurant in California received a petition from its employees to oust their union, UNITE-HERE. After receiving the decertification petition, which had been signed by a majority of employees—29 of 54 workers—Scoma’s withdrew recognition from the union.

Unbeknownst to Scoma’s, the union had persuaded six employees to revoke their signatures from the decertification petition before they withdrew recognition. Without the six signatures, the union still possessed majority support. In response, UNITE-HERE filed an unfair labor practice against Scoma’s for withdrawing union recognition.

In the decision, the court agreed that Scoma’s violated the National Labor Relations Act by withdrawing union recognition without a majority of employees voting in favor of decertification. However, the court ruled that the punishment—an order to recognize and bargain with the union—didn’t fit the crime. As described in the decision, the NLRB imposed a bargaining order on Scoma’s for its withdrawal of union recognition:

To remedy the violation, the ALJ ordered Scoma’s to (inter alia) “recognize and bargain with the Union for a reasonable period of time.” 362 NLRB No. 174, at 6. Consistent with “time-honored Board practice,” Caterair Int’l v. NLRB, 22 F.3d 1114, 1122 (D.C. Cir. 1994), the order “bar[s]” Scoma’s and its employees from “raising a question concerning the Union’s continuing majority status” during the required bargaining period.

The court vacated the bargaining order because:

[T]he Board concluded that the six revocation signatures prevented Scoma’s from proving the Union lacked majority support at the time of withdrawal. Although we do not disturb that conclusion, the Board’s remedy does not follow from it. A bargaining order is an extraordinary remedy that, on these facts, is out of keeping with the Act’s purposes. It rewards the Union for sitting on its hands. It punishes Scoma’s for acting unwarily but in good faith. And it “give[s] no credence whatsoever to employee free choice,” Skyline Distribs. v. NLRB, 99 F.3d 403, 411 (D.C. Cir. 1996) (internal quotation omitted), unduly delaying an election to determine majority status. We therefore vacate the bargaining order and remand to the Board for further proceedings.

To counteract overreach at the NLRB, President Trump needs to fill the vacancies at the NLRB in order to restore balance at the agency.

After that, as my colleague Hans Bader noted in a recent blog post, President Trump should expand his budget cuts to additional agencies like the NLRB. Besides the NLRB’s consistent overreach of authority and extreme partisanship, Bader cites the fact that NLRB’s caseload is shrinking but its budget continues to grow. A former NLRB members found that the NLRB “spends four times more on its workforce per decision issued than it historically did.” 

This session, Congress should address the partisanship at the NLRB and the agency’s bloated budget.