Over the next several years, the Biden National Labor Relations Board is likely to dramatically alter the legal landscape surrounding union organizing and bargaining and it is important that New Jersey employers understand these changes and are prepared to meet them. The Biden NLRB will likely endorse changes to current NLRB rules and precedent to make it easier for independent contractors to be classified as employees (and therefore able to be organized), allow for smaller groups of employees to organize and make it easier for unions to establish that companies are joint employers. The net impact of these changes will be to make it easier for unions to attempt to organize workplaces and expand their reach in companies that already have a union workforce. These potential changes are particularly salient for New Jersey employers given the uptick in union organizing activity across the state.
The NLRB has already set its sights on altering the standard to determine whether independent contractors are employees—which is a critical issue as only employees have a right to join a union. In The Atlanta Opera, 371 NLRB No. 45 (2021), hair and makeup workers hired by the Atlanta Opera as independent con-tractors claim that they are in fact employees of the Opera and should be allowed to join the International Alliance of Theatrical Stage Employees union.
On Dec. 27, 2021, the NLRB invited non-parties to submit briefs on this case, specifically requesting positions as to whether the NLRB should replace its cur-rent independent contractor standard. If the NLRB decides to replace the current independent contractor standard, it will likely adopt a more stringent standard, akin to the “ABC test” used in New Jersey to determine whether an independent contractor is an employee for purposes of alleged wage and hour violations, which will result in many more independent contractors being classified as employees under the National Labor Relations Act. For New Jersey employers this means that many of the hundreds of thousands of independent contractors working in the state would then be able to join a union.
The Biden NLRB is also looking to change the standards governing the appropriate size of bargaining units, allowing smaller units with fewer employees that are easier for unions to organize. In American Steel Construction, 371 NLRB No. 41 (2021), the Biden NLRB is considering whether to return to the “micro-unit” rule articulated in Specialty Healthcare, 357 NLRB 934 (2011), which the Trump NLRB overruled in 2017. In Specialty Healthcare, the Obama NLRB endorsed the concept of “micro-units” when evaluating potential bargaining units. Under the “micro-unit” standard, the NLRB presumes that a bargaining unit is appropriate when it is composed of employees that perform the same job at the same facility regardless of whether other employees share a community of interest with that unit. This means that organizing efforts can target a smaller group of employees to organize, allowing the union to gain a “toe-hold” in an employer’s operation from which it can expand its representation.
Finally, the Biden NLRB will likely return to the joint-employer test articulated in the Obama-era decision Browning-Ferris Industries, 362 NLRB 1599 (2015), which the Trump NLRB overruled. In Browning-Ferris, the NLRB expanded the joint-employer standard by holding that an employer’s status as a joint-employer hinges on the employer’s reserved right to control employees as well as its indirect control over employees. The Browning-Ferris decision relaxed the previous joint-employer standard, which required a demonstration that the putative joint-employer actually exercises direct control over the employees in question. By re-laxing the joint-employer standard, employees may assert their right to bargain with both their direct employer and the company that contracted their services. A return to the Browning-Ferris standard has the potential to lead to increased bargaining across a variety of industries, particularly those industries that rely on a franchise model. Importantly, the Biden NLRB announced its intention to imminently commence rulemaking on the standard for determining a joint employ-er—beginning the process of re-establishing Browning-Ferris through rulemaking.
In sum, the Biden NLRB is actively considering revising established NLRB rules and precedent. The net impact of these decisions will likely be to make it easier for unions to organize employees across a wide variety of industries. New Jersey employers should pay special attention to these decisions as the Garden State is seeing an increase in union activity and membership. In fact, in 2020, 16.1% of New Jersey employees were members of a union, up from 15.7% in 2019 and well above the national average of unionized workers per state which is approximately 10.8%. Given these trends, if the Biden NLRB adopts the organizing friendly posi-tions it is expected to, New Jersey will likely see continued growth in union efforts to organize workers and increases in overall union membership.
Matthew A. Fontana is a labor and employment partner at Faegre Drinker.