Peter Schaumber once served as the chairman for the federal agency responsible for resolving labor dispute cases. He’s now expressing concern over what has been happening there recently.
The National Labor Relations Board (NLRB) is responsible for enforcing federal labor law and resolving unfair labor practice complaints. President Donald Trump having his nominees approved has meant a shift in direction for the five-member board. But it has caused some upheaval.
Trump secured a majority on the board with his nomination of John Ring being approved April 11. His appointees have worked over the past year to rein in policy changes from when Barack Obama was president. But with that, the agency has also been chaotic with its back and forth on a critical decision and reported infighting.
“I think its important for the board to reverse the very damaging Obama-board decisions,” Schaumber said. “But that should be followed up by the promulgation of new rules, because otherwise, we’re simply going to have the flip-flopping of board law when control changes from one administration to the next.”
Former President George W. Bush appointed Schaumber to serve for two terms between 2002 and 2010. He was chairman of the board for roughly a year around 2008. Schaumber previously practiced law as a labor arbitrator with industry panels and national arbitration rosters.
The Obama administration encouraged unionization and imposed stricter rules on businesses with the aim of better-protecting workers against abusive employers. Trump has instead looked toward tax reform and deregulation to lessen the burden job creators face in the hopes they’ll invest more into their businesses and employees.
The NLRB ushered in some of the more notable reforms from the last administration. Its update to the joint-employer standard became highly controversial. The NLRB was able to update the standard, which impacts businesses that contract together, when ruling in a 2015 case involving Browning-Ferris Industries.
Trump was able to gain a majority vote on the board for a few weeks last year – when it reversed that earlier decision during a case involving Hy-Brand Industrial Contractors. Former NLRB Chairman Philip Miscimarra then split the five-member board evenly when he stepped down in December. Obama still has two of his picks serving since they have staggered five-year terms.
NLRB Inspector General David Berry issued a report a short time later which found a possible conflict of interest involving board member William Emanuel. The NLRB responded to the report Feb. 26 by vacating the decision from last year and restoring the updated joint-employer standard.
“The reversal by a three-member panel of a five-member decision is unprecedented,” Schaumber said. “The reversal, in this case, is as unwarranted as it is unprecedented.”
Schaumber adds that the earlier decision which updated the joint-employer standard was a significant departure from decades of established board law. Critics argue that it is overly vague and puts employers at unnecessary legal risk. The update made it easier for employers to be held liable for the workers of a company they contract with.
“What happened here is that, essentially, a three-member panel disqualified the fourth member of the board from participating in a decision in which they reversed a prior decision based on a determination from a designated agency ethics officer,” Schaumber said.
Schaumber adds that the Inspector General and agency ethics officer should have never gotten involved. He argues that board members themselves make decisions on whether to recuse. He also notes that’s it’s unusual that the report was issued after a decision was made in the Hy-Brand case.
“None of them should have gotten involved,” Schaumber said. “It should have been decided by Emanuel and then if the parties disagreed with his decision it would go to the circuit court of appeals. That’s the way it has happened before. That’s one point. Secondly, it’s wrong. He had a right to participate in this case in my view. The Inspector General’s report is shallow and flawed.”
Franchises and many other companies rely on contracting with critics warning the update went way too far. The joint-employer standard was previously determined based on whether a company had direct control over the employment policies of another business. The updated standard is instead determined based on indirect control.
Those in support of the updated standard have argued that it was a needed change that prevented employers from sidestepping their employment responsibilities. They believe large companies have been using contracting relationships to separate themselves from workers who should be considered their employees.
“It is truly an incredibly damaging decision,” Schaumber said. “It impacts, not only the viability of the franchise industry but also the viability of tens of thousands, if not hundreds of thousands, hoping to provide a product or service to another company, which helps the other company with profitability because they can focus on what they do.”
The NLRB has also been plagued with reports that there is infighting. Politico recently reported that dysfunction and infighting have crippled the agency. Schaumber says that it would be concerning if those reports end up being true, but not surprising.
“It would be a concern, but I’m not surprised,” Schaumber said. “After I left I understand that things just went downhill significantly. The Democratic members really shunned the Republican members. So I’m not surprised.”
Schaumber adds that there really wasn’t all that much hostility when he began transitioning out of the agency. They had a huge caseload that everyone worked to get done. He notes that board members disagreed often but were mostly civil when working together.
The NLRB could also be facing a tighter budget. The Office of Management and Budget is not allowing the agency to spend money allocated to it because the White House wants to take some of it back, sources told Bloomberg Law. Schaumber says that they did more work when he was starting out and with a smaller budget.
“We had a $150 million budget and we had a surplus,” Schaumber said. “And our caseload was more than it is today. I went through the caseload figures, and this is between 2008 and 2017, the number of board decisions has decreased 34 percent. The number of election petitions has decreased roughly 30 percent.”
