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By Feb 1, 2007
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HR Magazine, February 2007 Recent NLRB decisions present a new legal impetus for employers to revisit their supervisory classification of workers.

The National Labor Relations Board’s (NLRB) recent Kentucky River decisions sparked an intense reaction from labor and management as both sides focused immediately on how the rulings affected workers’ rights to join a union.

Potentially lost in the shuffle was a secondary but very important fact: The decisions give employers strong incentive to audit their processes for determining which workers they classify as supervisors.

Such a re-examination should spark déjà vu for employers, who were similarly encouraged to re-examine classification of workers when the Fair Labor Standards Act (FLSA) regulations were overhauled in 2004.

Just as employers were well served by auditing their classifications under the FLSA, they now will be well served by conducting similar reviews under the newly clarified standards of the National Labor Relations Act (NLRA). And, in fact, some of the lessons learned from FLSA audits can be useful today regarding NLRA audits of supervisor classifications.

However, while employers can and should apply lessons learned in FLSA audits to NLRA audits, they should be careful not to overlook important differences between the two. Most notably, employers should not confuse the definitions of a supervisor under the two laws, which are very different.

Key Points To Consider

When reviewing supervisor classifications to ensure that they jibe with the recent NLRB rulings, there are several key points to keep in mind.

Titles don’t matter. As with the FLSA, titles mean little when determining whether an employee qualifies as a supervisor under the NLRA.

That point was made abundantly clear in the board’s recent Kentucky River decisions, in which the NLRB examined several individuals with the same job title—charge nurse. It found that some of these nurses were supervisors and others were not—even among full-time charge nurses working at the same hospital—due to the very fact-specific definition of a supervisor.

Job duties matter. The NLRA defines a supervisor as any individual having the authority, “in the interest of the employer,” to engage in any of 12 enumerated supervisory functions. These functions include the authority to:

  • Hire
  • Transfer
  • Suspend
  • Lay off
  • Recall
  • Promote
  • Discharge
  • Reward or discipline
  • Adjust employees’ grievances.
  • Assign
  • Responsibly direct employees
  • Recommend any of the above actions

Note: The exercise of these supervisory functions must be more than incidental to the individual’s primary responsibilities. As a result, employers must ensure that individuals they classify as supervisors spend a substantial portion of their time carrying out these duties if they are to pass muster under the NLRA. (These functions must be more than incidental to the purported supervisor’s job, but a “substantial portion” of their time could be as little as 15 percent to 20 percent.)

Also, employers should make sure that job descriptions are updated to include all of the above duties that supervisory personnel carry out.

Independent judgment is vital. Under the NLRA, individuals who carry out the above 12 duties without exercising independent judgment will not be considered supervisors.

The importance of independent judgment was underscored by the Kentucky River decisions, which made this an essential and overriding aspect of the board’s analysis.

(The board examined independent judgment in part because the U.S. Supreme Court said the board improperly limited the scope of this term in NLRB v. Kentucky River Community Care (121 S. Ct 1861) in 2001. This is why the recent group of cases is referred to collectively as the Kentucky River cases.)

To demonstrate independent judgment, supervisors must carry out their functions in a manner that is essentially free from the control of others and these functions must rise above being routine or clerical. This means that a supervisor’s functions are not dictated by detailed instructions, such as rules, regulations, verbal instructions or a union contract.

Independent judgment is a function of both job design and actual practice. When purported supervisors’ jobs are designed to create little autonomy, they are less likely to meet the independent judgment test. Equally important, when policies or job descriptions are written to provide independent judgment but the employer’s actual practice is to micromanage supervisors and require them to obtain higher-level approval for many decisions, those individuals will be less likely to meet the NLRA definition of a supervisor.

Clarified definition of “assigning.” Among the 12 supervisory functions listed above, most are relatively easy to identify and could be used to establish an individual as a supervisor under most relevant employment laws. However, the function of “assigning” is relatively ambiguous.

As a result, the board attempted to clarify this definition in the Kentucky River decisions (Oakwood Healthcare Inc. (Case 7-RC-22141); Golden Crest Healthcare Center (Cases 18-RC-16415 and 18-RC-16416); Croft Metals Inc. (Case 15-RC 8393)). The board explained that assigning means to determine the time, place or overall work of an individual.

This suggests that individuals who spend a substantial part of their time assigning employees significant overall duties, designating them to work at a particular place or time, or instructing them to work overtime are more likely to be considered supervisors.

This is often an important consideration in certain industries, such as health care and construction. In particular, then, during an audit of supervisory positions certain employers should be especially attuned to identifying the presence or absence of such duties. As with each NLRA supervisor analysis, the employer also must evaluate the degree of independent judgment exercised.

Clarified definition of “responsibly directing.”Another definition that the board sought to clarify was that of “responsibly directing” other employees.

The board explained that to “responsibly direct” the work of others, a purported supervisor must be held to a meaningful level of accountability. He must have the authority to direct work, must take corrective action and—most important—must face the possibility of adverse consequences for any shortcomings.

In other words, “responsible” direction means there must be a chance of disciplinary action or a lower performance evaluation if the ostensible supervisor does not execute this function satisfactorily. Accountability for the work of others helps create a clear distinction between supervisors (whose interests must align with management) and employees (who may have contradictory interests).

Because of the act’s definition of these terms -- and the board’s interpretation of them—determining who is and who is not a supervisor remains a highly fact-intensive inquiry. Thus, employers should thoughtfully review who they classify as a supervisor and periodically re-evaluate such classifications.

Supervisors Are Not Automatically Exempt

When employers review their supervisor classifications under the NLRA, the FLSA will naturally come to mind, particularly on the heels of the overhaul of FLSA regulations and the explosion of FLSA class actions.

The volume of FLSA claims has increased in some regions by as much as 1,000 percent during the past five years. This is due in part to the availability of attorneys’ fees and liquidated damages, as well as the potential for individual claims to mushroom into collective actions.

In view of these skyrocketing claims, be especially mindful that being considered a supervisor under the Kentucky River analysis does not mean that an individual qualifies for exempt status under the FLSA. In other words, before concluding that an employee is exempt from minimum wage or overtime requirements, ensure that he fulfills all of the criteria for an exemption pursuant to applicable law. Do not rely on the NLRA analysis.

It would be understandable for employers to mistakenly apply the analysis for one law to the other because both the FLSA and NLRA take some of the same factors into account.

The FLSA exemption that may come nearest to the NLRA definition of a “supervisor” is the “executive” exemption, one of the so-called “white-collar” exemptions. The other white-collar exemptions are administrative, professional and outside sales. To qualify for any of these exemptions, an employee must meet all of the applicable criteria.

Executive and Administrative Exemptions

To qualify for the executive exemption, an employee must be paid on a “salary basis” of at least $455 per week and the employee’s primary duty must be to:

  • Manage the organization or a department or subdivision.
  • Customarily and regularly supervise at least two other full-time employees or the equivalent.
  • Have the authority to hire or fire or to make particularly meaningful recommendations regarding hiring, firing, demotion, promotion or other change of employment status.

Even if employees meet the foregoing duties test, they may not meet the salary-basis test. Charge nurses, such as those found to be supervisors in the Oakwood case, illustrate this vividly.

In most health care facilities, full-time charge nurses (who may exercise independent judgment in carrying out one or more supervisory functions) are nevertheless paid on an hourly basis. Therefore, they are not paid at least $455 a week on a salary basis, a threshold requirement for an FLSA white-collar exemption.

But a supervisor who does not meet the requirements for the executive exemption could qualify for the FLSA’s administrative exemption. Again, the person with the title of supervisor must meet all of the applicable requirements.

Besides meeting the salary-basis test, to qualify for this exemption, an individual’s primary duties must be office or nonmanual work directly related to the management policies or general policies of the employer or its customers. In addition, the individual must exercise discretion and independent judgment with respect to matters of significance.

While this exemption could be applicable, the analysis can be tricky and is often problematic. If the individual in question has the authority to bind the employer or deviate from company policies, the person is likelier to qualify for the exemption. Handling less weighty matters does not fulfill the requirements. Again, this analysis may or may not produce the same result as analysis under the NLRA.

Employers also should distinguish the NLRA’s definition of supervisor from its meaning under equal employment opportunity (EEO) and leave laws. (See “Supervisory Status in EEO Claims,” at right.)

What Does This Mean for You?

Even though the laws described in this article do not use the same definition of supervisor, employers can take constructive actions in light of the Kentucky River decisions.

These decisions present you with a good opportunity to review which workers are supervisors and which ones are not. Remember, duties count. Titles do not. This review could also result in changes to current or prospective bargaining units.

Perhaps more important, you should use this review to determine how to plan communications with and training of your supervisors. It is especially important to provide training, to avoid fundamental errors and to support affirmative defenses for use in harassment cases.

Considering the cost and frequency of wage and hour claims, it pays to revisit the status of every worker classified as exempt under the FLSA based on what the worker currently does. Again base this review on each individual’s present circumstances, not just their job title or classification under another statute. Ideally, you should conduct these reviews annually.

Even though the NLRA decisions continue to spark controversy, the board’s analysis is helpful. From a much broader perspective, re-examination of which workers are supervisors and which ones are not is a worthwhile exercise for employers. Re-examination allows for review and affirmation of the company’s philosophies, goals and values. It also helps to ensure that those entrusted with supervisory authority have the knowledge and training to help them—and those in their charge—succeed.

A. Kevin Troutman is an attorney with Fisher & Phillips LLP, a national law firm practicing exclusively in the field of labor and employment law.

Web Extras

SHRM articles:
NLRB's Expansive Definition of 'Supervisor' Could Cut Union Strength 
(HR News)

Who's a Supervisor? 
(HR Magazine)

Step by Step  
(HR Magazine)


Supervisors and the NLRA

The National Labor Relations Act (NLRA) establishes and protects employees’ fundamental rights to join or to assist labor organizations. The act prohibits employers from interfering with or restraining employees’ exercise of these rights. It also provides that employers cannot attempt to dominate or influence a labor union.

Accordingly, the NLRA excludes supervisors from the definition of an “employee,” thus making them ineligible for union membership. This definition of a supervisor as a nonemployee reflects the fact that a company has the right to expect strict loyalty from those acting as its agents. Moreover, it recognizes that unions and their members have the right to remain free from supervisory influence within their ranks.

Such concerns, including protecting employees from so-called “sham unions” -- unions that do not really represent the interests of the employees but are illegally dominated by management -- have long been important. Thus, an accurate determination as to which employees are supervisors under the NLRA is necessary to safeguard the interests of both labor and management.


Supervisory Status in EEO Claims

Labor leaders and spokespersons have repeatedly denounced the Kentucky River decisions as providing employers with a road map to strip millions of workers of their right to join a union. As a general proposition, unions seek to minimize the number of individuals classified as supervisors, thus maximizing their pool of potential members. (See “Supervisors and the NLRA,” above.)

Employers, by contrast, benefit from designating as supervisors as many individuals as possible, since doing so reduces the pool of potential union voters.

But having more supervisors doesn’t necessarily serve employers well in equal employment opportunity (EEO) cases, such as those involving the Americans with Disabilities Act, Age Discrimination in Employment Act, Pregnancy Discrimination Act, Family and Medical Leave Act or Title VII of the 1964 Civil Rights Act.

Here are a few reasons why:

  • Because supervisors are agents of the employer, their actions can be legally attributed to the company. The more supervisors a company has, the greater the potential number of individuals who can make a mistake and incur liability for the business.

  • Because employers imbue supervisors with their authority over other employees, employers face increased liability for any inappropriate actions or decisions these supervisors engage in. This makes it vital to identify and provide adequate training for ostensible supervisors.

  • Employers are liable for discriminating or harassing behavior that they are aware of, or should have been aware of. The more supervisors a company has, the more opportunities for one such individual to observe inappropriate comments or behavior. If that same supervisor fails to take action, the company’s potential liability increases.

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