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‘Leveling playing field’ between union, nonunion workers was lawful basis for hiring/transfer policy

By Ronald Miller, J.D.

On remand from the First Circuit, a three-member panel of the NLRB ruled that an employer did not unlawfully discriminate against union workers at one of its three hospitals by denying them preferential, internal hiring status for job vacancies at its two nonunion hospitals. Accepting the appeals court’s decision as the law of the case, the Board held that the employer established that the hiring/transfer policy served the legitimate and substantial business interest of leveling the playing field between represented and unrepresented employees. The General Counsel made no showing that the employer’s conduct was improperly motivated, nor was it alleged that the policy was “inherently destructive” of employees’ Section 7 rights (Southcoast Hospitals Group, Inc., October 6, 2017).

Analytical framework. Applying the analytical framework established by the Supreme Court in NLRB v. Great Dane Trailers, the NLRB issued a decision finding that the employer violated Section 8(a)(3) by maintaining and enforcing a hiring/transfer policy under which it gives preference to unrepresented employees over represented employees when filling positions at its nonunion facilities. The Board found that the policy had at least a “comparatively slight” impact on represented employees’ Section 7 rights because it discriminated against represented employees based on their representational status and their having obtained a contractual benefit through collective bargaining. The Board then found that the employer failed to meet its burden under Great Dane to prove that the hiring/transfer policy served a “legitimate and substantial business justification.” Specifically, the Board rejected the employer’s two proffered business justifications for the policy: (1) that it prevented complaints by unrepresented employees about being shut out of bargaining unit positions; and (2) that it “helps level the playing field” between represented and unrepresented workers.

Subsequently, the employer petitioned the First Circuit for review. The appeals court vacated the Board’s order. Also applying the Great Dane analytical framework, the court held that substantial evidence did not support the Board’s rejection of the employer’s argument that the hiring/transfer policy served the legitimate and substantial business interest of leveling the playing field between represented and unrepresented employees.

Law of the case. Accepting the First Circuit’s opinion as the law of the case, the Board held that the employer established that the hiring/transfer policy serves the legitimate and substantial business interest of leveling the playing field between represented and unrepresented employees. Under Great Dane, “when the resulting harm to employee rights is comparatively slight, and a substantial and legitimate business end is served,” the employer’s conduct is lawful unless the General Counsel makes an affirmative showing of improper motivation. Here, the General Counsel did not allege or attempt to prove that the hiring/transfer policy was the product of antiunion motivation.

Nor was there any basis to find a violation on other grounds. The General Counsel conceded that the hiring/transfer policy was not “inherently destructive” of employees’ Section 7 rights. Accordingly, the employer did not violate Section 8(a)(3) by maintaining and enforcing its hiring/transfer policy giving preference to unrepresented employees over represented employees when filling positions at its nonunion facilities.