Fifth Circuit Panel Invalidates NLRB Decision

In July 2021, the United Electrical, Radio, and Machine Workers of America (the Union) petitioned for a vote on whether it could represent the employees of Hudson Institute of Process Research Incorporated  (Hudson), a legal outsourcing and staffing company that provides legal support services to companies and individuals seeking employment-based visas. When disputes arose between Hudson and the Union, the five-member National Labor Relations Board (the Board) determined that the vote should be on a employer-wide basis and that team leads, team lead assistants, floating team leads, and the entire revision specialist team should be considered “employees” rather than “supervisors” and thus were entitled to participate in the vote. 

In September, 2022, the NLRB certified the election in favor of the Union. However, Hudson challenged the Board’s ruling and thus refused to negotiate. Both parties appealed to the Fifth Circuit, with Hudson challenging the Board’s two decisions and with the Union seeking enforcement of the Board’s order directing Hudson to recognize and bargain with the Union. 

In September, in Hudson Institute of Process Research, Inc. v. National Labor Relations Board, the Fifth Circuit sided with Hudson on the question of which personnel counted as “supervisors” and refused to enforce the Board’s order.  The opinion is lengthy, but the analysis is pretty straightforward. The U.S. Supreme Court has created a three-part test for determining whether personnel count as “supervisors” for the purposes of the National Labor Relations Act.  As the Fifth Circuit puts it,

Individuals are supervisors if “(1) they hold the authority to engage in any of the 12 listed supervisory functions, (2) their exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment, and (3) their authority is held in the interest of the employer.” 

Because we are dealing with several categories, the Fifth Circuit went through each individually, but in each case, the Court found that all three conditions were met and that the Board’s decision was thus legally erroneous and not supported by substantial evidence. To some extent, the differing outcomes are explained by the Board’s determination that people count as supervisors only if they exercised supervisory functions. The Court emphasized that the exercise of supervisory functions is not part of the test. All that is required that they have authority to exercise a supervisory function, whether or not they actually exercise it. In other areas, the Court was persuaded that Hudson provided, and the Board ignored or gave insubstantial weigh to, evidence of the personnel in question exercising supervisory functions.

The Court upheld the Board’s determination that the vote should take place on an employer-wide basis. Nonetheless, having found that the Board erred in determining who could participate in the vote, it reversed the bargaining order and denied enforcement.