Last week, the Sixth Circuit rejected the attempt of a government contractor to avoid an unfair labor practice charge by claiming that it was a joint employer entitled to the benefit of the NLRA exemption for the federal government. Bannum Place of Saginaw LLC, v. NLRB, No. 21-2664 (6th Cir. 7-14-22). The employer first raised the argument -- that the federal Bureau of Prisons so regulated its operations under their service contract that the employer constituted a joint employer with the federal government – when the union sought recognition. However, the employer failed to appeal the Regional Director’s decision rejecting the argument and the NLRB refused to entertain – or relitigate -- the issue when the same employer was then subject to an ULP Charge arising out of that same, or related, election. 29 C.F.R. § 102.67(g). The Court agreed that courts will defer to the NLRB’s refusal to relitigate legal issues which the party could have but failed to appeal to the Board during the representation phase. In any event, “because Congress has unambiguously limited the reach of the exemption in § 2(2) to governmental entities and wholly owned government corporations, this court will not extend the exemption to government contractors.”
The Court observed that the no-re-litigation rule only
applies when the second proceeding is related to the representation issue when
the argument was first raised and then not appealed. However, the employer could not successfully
argue that this ULP was unrelated to the earlier representation proceeding for
the first time on appeal because the employer failed to raise the unrelatedness
argument before in the underlying ULP proceeding. The Court will only consider arguments that
had first been made to the NLRB.
The employer also failed to point to any new circumstances
that could have justified re-litigation of the issue during the ULP phase.
The employer then argued that its joint employer argument went
to the NLRB’s statutory jurisdiction and could not be waived. However, the Court found that this argument
would likewise fail because the NLRA did not address joint employment and only
exempted certain types of employers, including the federal government. The Supreme Court had earlier rejected a
similar argument by a hospital which claimed its lease with a state government made
it a government subdivision. Other
circuit courts had likewise rejected arguments to expand the reach of the
limited exemptions:
As the Tenth Circuit held, “because Congress has unambiguously limited the reach of the exemption in § 2(2) to governmental entities and wholly owned government corporations, this court will not extend the exemption to government contractors.”
. . .
In sum, even if Bannum’s contract vests in the BOP substantial control over Bannum’s daily operations, that does not transform the company from a covered employer into either a governmental entity or a wholly owned government corporation and thus beyond the Board’s reach.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
