Employment Law Daily NLRB didn’t explain why it diverged from joint employer standard; CNN was successor employer anyway
Tuesday, August 8, 2017

NLRB didn’t explain why it diverged from joint employer standard; CNN was successor employer anyway

By Ronald Miller, J.D.

Finding that the NLRB, in a decision prior to its Browning-Ferris joint employer ruling, applied a standard for determining whether two companies were joint employers that appeared to be inconsistent with precedent without addressing those precedents, the D.C. Circuit declined to enforce a Board order that CNN was a joint employer when it ended service contracts for technical support and created an in-house workforce. On the other hand, pointing to overwhelming evidence of anti-union animus on the part of CNN in its hiring practices with respect to bargaining unit members, the appeals court agreed with the Board that CNN was properly found to be successor employer of the contracting companies. Judge Kavanaugh filed a separate opinion concurring in part and dissenting in part (NLRB v. CNN America, Inc., August 4, 2017, Garland, M.).

Since the inception of its Washington, D.C., and New York City bureaus, CNN relied on outside contractors to operate the equipment necessary to produce and broadcast the news. Pursuant to exclusive service contracts, various technicians employed by the contractors performed much of the technical work at both bureaus; those technicians were consistently represented by a union. In 1982, the Board certified a union as the collective bargaining representative in Washington and certified the same union to represent New York technicians in 1985. When CNN switched contracting companies, the new company would hire nearly all of its predecessor’s employees and continue to recognize the union.

In-house workforce. In September 2003, CNN announced that it was terminating its contracts and would begin directly hiring technicians at both bureaus. It said that it wanted a new workforce to take advantage of technological developments in the industry, particularly computer-related technology. When the union requested recognition and bargaining, and asked to discuss future employment prospects for unit employees, CNN refused. Former employees of the contractor could apply for the new jobs, but they would have to go through the interviewing process. In the end, more than 100 former bargaining unit employees were not hired.

CNN was joint employer. After CNN terminated the service agreement, the union filed unfair labor practice charges with the NLRB. An administrative law judge first determined that CNN had been a joint employer of the contractor’s employees before termination of the service agreements and was thus bound by the CBA with the union. He further determined that CNN became a successor employer after it terminated the service agreement and hired a new workforce. Additionally, the ALJ found that the reasons given by CNN for its termination of the agreements was pretextual. Rather, a major motive in the decisions was CNN’s desire to operate its bureaus without a union. The staffing project was found to be a sham process, during which CNN engaged in widespread discrimination against bargaining unit members.

CNN appealed to the Board, which finally issued its decision in 2014, affirming the ALJ. Specifically, the Board found that CNN, as a joint employer, terminated the service agreements out of anti-union animus and failed to bargain with the union about its decision to terminate the agreements. The Board further found that, as a successor employer, CNN failed to recognize and bargain with the union and unilaterally changed the employees’ terms and conditions of employment. CNN was also found to have discriminated against union members in its hiring process, and on four occasions, supervisors made coercive statements. After denying CNN’s motion for reconsideration, the Board applied for enforcement of its decision, and CNN cross-petitioned for review.

Joint employer status. The D.C. Circuit first concluded that the NLRB’s determination that CNN and the contractor were joint employers could not stand because the Board applied a standard for determining whether companies are joint employers that appears to be inconsistent with its precedents, without addressing those precedents or explaining why they do not govern.

What test? In this case, the Board had cited two 1984 decisions as setting forth the governing standard it intended to apply in its joint employer analysis. It would find that two separate entities are joint employers of a single work force if the evidence shows that they “share or codetermine those matters governing the essential terms and conditions of employment.” However, in a footnote, the Board acknowledged that its later 2002 opinion in Airborne Express “stated that the test for joint-employer status requires ‘direct and immediate’ control by the putative joint employer over employment matters.”

Predates Browning Ferris. The Board decision in this case was issued by a three-member panel. After this Board decision, but before briefing in this appeal, the full Board considered its current standard for assessing joint employer status in Browning Ferris Industries of California, Inc. dba BFI Newby Island Recyclery and concluded that the prevailing standard during that time period required an employer’s exercise of “direct and immediate” control. Browning-Ferris went on to criticize that standard and overruled Airborne Express.

Reasoning lacking. Unlike Browning-Ferris, where the appeals court found that the Board carefully examined three decades of its precedents, criticized the “direct and immediate” control standard, and forthrightly overruled those cases, the Board had done none of those things here. Accordingly, the appeals court determined that it had to vacate the two unfair labor practice findings that rested on CNN’s joint employer status.

Successor employer status. The three remaining unfair labor practice findings, however, depended on whether CNN was a successor employer. CNN did not contend that it made a significant change in the essential nature of the contractor’s operations; basically, it continued the same business operations with employees who performed the same work, at the same locations, and using the same equipment. Thus, the only question was whether the majority of CNN’s employees were previously employed by the contractor.

Here, the Board found overwhelming evidence of anti-union animus on the part of CNN, so that it was presumed that a majority of incumbent employees would have been hired but for CNN’s discriminatory hiring practices. It was reasonable for the Board to infer that CNN planned to hire a sufficient number of former contractor employees to lend an air of impartiality, while avoiding the number that would impose a bargaining obligation. The appeals court was convinced that substantial evidence supported the Board’s finding that anti-union animus was a motivating factor in CNN’s hiring decisions, and it agreed with the Board finding that CNN was a successor employer the contractor.

Partial concurrence and partial dissent. Judge Kavanaugh agreed with the majority’s conclusion that the Board erred in its analysis of the joint employer issue, but he disagreed with the majority’s determination to upholding the analysis of the successor-employer issue. Under his view on the merits of the successor-employer issue, CNN qualified as a successor employer only under the traditional test. The dissent would remand to the Board to re-determine the appropriate remedies associated with the proper successor-employer conclusion.

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