Legal Bulletins

On September 29, 2006, the National Labor Relations Board issued decisions in Oakwood Healthcare, Inc., 348 NLRB No. 37 and two companion cases responding to NLRB v. Kentucky River Community Care, 532 U.S. 706 (2001). In that case, the Supreme Court rejected the criteria used by the Board to determine whether employees exercised the “independent judgment” required to be classified as supervisors. The Board used the three decisions as an opportunity to articulate definitions of that criterion and two other statutory criteria, namely “assign” and “responsibly direct.”

Unions reacted vehemently and vociferously to those decisions, perhaps because the Board’s press release characterized the cases as being “major” thereby suggesting that the definitions departed from the criteria traditionally used. However, a careful review of the decisions, and the results reached by the Board, indicates that the unions have significantly overreacted.

The majority opinion in Oakwood Healthcare, Inc., written by the Republican Board members, explained that, in the past, the Board had failed to articulate with sufficient clarity the meaning of assign, responsibly direct, and independent judgment. The majority then proceeded to draw upon legal precedents and ordinary dictionary definitions of those terms attempting to remedy that situation. The majority was careful to state that they were eschewing “a results-driven approach” and were cognizant of the fact that the Board generally exercised caution to avoid construing supervisory status too broadly.

Assign

The majority opinion points out that the dictionary defines “assign” as “to appoint to a post or duty” and noted that this supervisory function and the others itemized in the National Labor Relations Act (“the Act”) share the common trait of affecting a term or condition of employment. For that reason, the majority construed that term to refer to “the act of designating an employee to a place (such as a location, department, or wing), appointing an employee to a time (such as a shift or overtime period), or giving significant overall duties, i.e., tasks, to an employee.”

The employees at issue in this case were Registered Nurses who served as Charge Nurses so designating other nurses to be the person to regularly administer medications to patients was cited by the majority as an “assignment.” On the other hand, a Charge Nurse does not make an assignment by simply ordering a nurse to immediately give a sedative to a particular patient. As a consequence, a Charge Nurse assigns work by designating significant overall duties to an employee, not by ad hoc instruction to perform a discrete task.

The Democrat members’ minority opinion took issue with that definition because it would purportedly expand the number of employees who would be classified as supervisors precluded from union representation. According to that opinion, the majority’s definition would operate to classify almost all staff nurses as supervisors.

The minority opinion limited the definition of “assign” as involving only significant employment decisions such as “determining: (1) an employee’s position with the employer (in most settings, identified by job classification); (2) designated work site (i.e., facility or departmental unit), or (3) work hours (i.e., shift).” Thus, the requisite ability to assign would denote the authority to determine basic terms and conditions of an employee’s job, not merely the assignment of tasks.

Responsibly To Direct

The majority opinion stated that the term “responsibly to direct” was meant to encompass personnel who exercise basic supervision, but lack the authority or opportunity to perform any of the other 11 statutory functions listed by the Act. As a consequence, that category of personnel is not limited to department heads or other managers higher than first-level supervisors.

The majority opinion explained that the “responsibly” means that the person is accountable to his superiors if the employees whom he directs to perform tasks fail to do that work properly and that he can take corrective action against them. The concept of accountability creates a distinction between personnel whose interest in directing employees’ tasks align with management and personnel whose interest in directing other employees is simply the completion of a certain task. Hence, a potentially adversarial relationship exists between the first category and the employees being directed.

The minority opinion criticized the majority opinion for focusing on the meaning of “responsibly” and failing to acknowledge that the legislative history indicates that the phrase “responsibly direct” refers to the general supervisory authority delegated to foremen overseeing a department and the concomitant accountability. As a consequence, that phrase does encompass the one-on-one task direction given by minor supervisory employees.

Independent Judgment

According to the majority opinion, “independent judgment” requires the exercise of a substantial degree of discretion, including ordinary professional and technical judgments in directing less skilled employees to deliver services. The majority explains that “judgment” refers to the mental or intellectual process of forming an opinion or evaluation by discerning and comparing and that “independent” means not being subject to control by others. A judgment may be independent even if company rules and policies, as compared to detailed written or verbal instructions, apply to a particular subject so long as they allow for discretionary choices.

The majority opinion also points out that the discretion must rise above the routine or clerical. For example, a Charge Nurse would not exercise such discretion if a work assignment is made solely on the basis of equalizing workloads. A Charge Nurse would exercise the requisite discretion if he is allowed to determine when an emergency exists as defined by a hospital policy and to deviate from it if he determines that he should do so.

The minority opinion did not disagree with the majority’s definition of independent judgment, but insisted that it must be applied on a case-by-case basis. The minority also took no view of the specific examples discussed by the majority.

Application of the Definitions

The minority opinion observed that the consequences of the majority’s decision would take time to play out and depend, in some measure, on how the Board applies the principles articulated. The classifications of the employees at issue in Oakwood Healthcare and its companion cases, Beverly Enterprises-Minnesota, Inc., 348 NLRB No. 39 (2006) and Croft Metals, Inc., 348 NLRB No. 38 (2006), illustrate how prescient that observation was.

In Oakwood Healthcare, the majority held that only 12 of the Registered Nurses who worked permanently as Charge Nurses were statutory supervisors, but more than 100 other RNs who served as Charge Nurses either permanently or on a rotating basis did not meet the applicable criteria. According to the majority, the employer had failed to show that even the permanent Charge Nurses were not required to take corrective action or be subject to discipline or lower performance evaluations if other nurses did not comply with their directives. Thus, the Charge Nurses did not “responsibly direct” employees.

On the other hand, the evidence demonstrated that most permanent Charge Nurses used independent judgment when: (1) choosing the nurses and other staff members whose skill sets and proficiency levels match the patients’ condition and special needs and condition; and (2) allocating the hospital resources available for the particular shift. The hospital’s written policies provided only very general guidelines that applied to those life and death decisions and that necessarily required those Charge Nurses to exercise substantial discretion.

The majority, however, held that the Emergency Room Charge Nurses did not exercise such judgment because their primary functions were to triage patients and inform other hospital units of possible admissions. Moreover, those Charge Nurses do not consider patient needs or nursing skill when assigning staff who generally rotated assignments without input from the Charge Nurses. Interestingly, the majority reached that conclusion despite the fact that the union and employer had stipulated that all Charge Nurses exercised the same authority.

The majority concluded that the nurses who rotated as Charge Nurses did not do so according to an established pattern or predictable schedule. As a consequence, the evidence failed to prove that those nurses spent a substantial amount of their time working as Charge Nurses.

Two Republican Board members who served on the three-member panel in Beverly Enterprises-Minnesota, Inc. voted to hold that none of the Charge Nurses at the nursing home could be classified as supervisors under the criteria articulated in Oakwood Healthcare, Inc. In reaching that conclusion, the Board found that the Charge Nurses did not exercise the requisite degree of authority because they could mandate that Certified Nursing Assistants (“CNA”) leave work early, work after their shifts end, or move to different parts of the facility.

The Board also found that the Charge Nurses did not responsibly direct CNAs even though the Charge Nurses instructed them to perform specific tasks and oversaw and acted to correct their performance. The Charge Nurses, however, were not accountable for their direction of the CNAs because the evidence failed to show that they experienced material positive or negative consequences based upon that activity. For example, the annual performance evaluations given to Charge Nurses sometimes made no mention of that job duty and none of them were ever told that a poor rating in that area could result in an adverse action.

In Croft Metals, Inc., a panel comprised of only Republican members held that none of the Lead Persons employed in various departments of a manufacturing plant should be classified as supervisors. The Board predicated that conclusion on the findings that the Lead Persons neither assigned nor exercised independent judgment when responsibly directing employees in the production units that they oversee.

The Lead Persons did not prepare the employees’ work schedules or assign them to shifts, overtime, production lines, departments, or job classifications. In addition, the employees generally performed the same routine jobs everyday and the Lead Persons’ supervisors decided whether to move employees between departments to adjust for staffing needs. Those facts demonstrated that the Lead Persons did not make assignments within the meaning of the Act.

The Lead Persons made decisions regarding the order in which work was to be performed and which employees would perform certain tasks so that production goals and schedules were achieved. The Lead Persons also corrected employees’ job performance and instructed them on proper techniques. Moreover, the employer evaluated and disciplined Lead Persons who failed to perform those duties. As a consequence, the Lead Persons responsibly directed employees.

The Board concluded that, in doing so, however, the Lead Persons did not exercise a degree of discretion that rose above the “merely routine or clerical.” For example, the Lead Persons provide minimal guidance to the production employees who perform repetitive tasks and are not required to balance and consider various factors when making production decisions and directing employees.

Conclusion

The definitions of “assign”, “responsibly direct”, and “independent judgment” enunciated in Oakwood Healthcare do not appear to represent any radical departure from the manner in which those terms had previously been interpreted by the Board and the appellate courts. Moreover, application of those terms by the Republican Board members in Beverley Industries and Croft Metals suggests that the “new” definitions will not lead to the classification of significantly more employees as supervisors who will be unable to unionize.

Indeed, the Board rejected the employers’ arguments regarding the overwhelming majority of the putative supervisors in each of those cases. By doing so, the Board reached the same conclusions that have been traditionally been made in cases involving similar employees. Time will tell, of course, but the Union reaction to Oakwood Healthcare seems to be totally unwarranted based on the Board’s performance to date. See also Avante at Wilson, Inc., 348 NLRB No. 71 (2006) (Members Schaumber, Kirsanow, and Walsh reverse Regional Director’s determination that Registered Nurses were statutory supervisors who should be excluded from bargaining unit).

In fact, the approach set forth in the Democrat Board members’ minority opinion in Oakwood Healthcare would have radically changed the legal landscape by classifying virtually all first level supervisors as statutory employees. Anyone familiar with Board law knows that has never been true. Thus, the incendiary accusations made by many in the labor movement against the majority opinion appear ironic and hypocritical.