In a decision that should prove to be very helpful to employers in general, and health care employers in particular, the U.S. Supreme Court recently clarified the "independent judgment" prong of the test for determining supervisory status under the National Labor Relations Act (NLRA). The case, NLRB v. Kentucky River Community Care, decided on May 29, 2001, required the Court to review a determination by the National Labor Relations Board (NLRB or the Board) that registered nurses at an assisted living facility for mentally ill persons were not supervisors excluded from the NLRA. The Court rejected the NLRB’s ruling and held that an employee's use of "ordinary professional or technical judgment" in the supervision of less-skilled employees did not preclude a finding that the employee was a supervisor exempt from the NLRA. The decision resolved a split among the federal appellate courts and removed a substantial hurdle for employers seeking to exclude supervisory employees from a collective bargaining unit.
In Kentucky River, the facility challenged the inclusion of its registered nurses in a unit of employees that a labor union sought to organize. The employer asserted that the registered nurses were supervisory employees because they acted as "building supervisors" and were responsible for monitoring the facility's licensed practical nurses and ensuring adequate staffing levels for the facility. The NLRB rejected the employer’s challenge, ruled that the registered nurses were not supervisors and ordered that they be included in the bargaining unit represented by the union.
The determination of supervisory status under the NLRA requires a fact-specific inquiry into the employees' duties and responsibilities. Section 2(11) of the NLRA defines a supervisor as having authority, in the interest of the employer and in the exercise of independent judgment, to undertake or effectively recommend at least one of twelve enumerated supervisory actions: hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, direct or discipline other employees, or adjust their grievances. The NLRB has formulated a three-prong test to apply this standard. Under this test, an individual is considered a supervisor if the employee possesses the authority to perform one of the twelve enumerated functions; the employee exercises that authority through the use of independent judgment; and the employee exercises the authority in the interest of the employer.
For many years, the NLRB has limited the availability of the supervisory exclusion in cases involving professional employees, particularly registered nurses. Initially, the NLRB imposed the limitation by its restrictive interpretation of the third prong of the supervisor test. The Board contended that nurses did not exercise their authority "in the interest of the employer" when their exercise of independent judgment was incidental to their exercise of professional or technical judgment. In 1994, however, the U.S. Supreme Court rejected the NLRB's interpretation of the third prong in NLRB v. Health Care & Retirement Corp. of America. Undaunted by the Court’s decision in Health Care, the NLRB shifted its rationale for limiting the supervisory exclusion to the second prong. In cases subsequent to Health Care, the NLRB rejected employers' claims that registered nurses were supervisors on the ground that the "independent judgment" test for supervisory employees is not satisfied where the employees exercise "ordinary professional or technical judgment in directing less-skilled employees to deliver services in accordance with employer-specified standards."
Consistent with this revised interpretation, in Kentucky River the NLRB ruled that the registered nurses did not exercise supervisory authority through the use of "independent judgment" because their exercise of judgment in the performance of their duties rested upon their ordinary professional or technical skill and experience. The Supreme Court flatly rejected the NLRB's interpretation of the independent judgment test and criticized the Board’s attempt to use its interpretation of the second prong of the supervisor test to achieve the same result as the interpretation of the third prong that was rejected in Health Care. In both Kentucky River and Health Care, the Court held that the NLRB’s interpretation of the supervisor test was inconsistent with the express language of the NLRA.
The Court’s decision in Kentucky River does not close the door entirely, however, to the potential limitation of the supervisory exclusion to professional employees. In an effort to accommodate the NLRB’s concern that the Court’s ruling would effectively prevent any professional employee from being a member of a bargaining unit eligible for union representation, the Court suggested an alternative interpretation that would survive Supreme Court review. The Court suggested that the Board could limit the supervisory status of professional employees by distinguishing employees who direct the manner of other employees’ performance of discrete tasks from employees who direct other employees. Only the latter category of employees would be excluded as supervisors. Although it seems likely that the NLRB will pursue the course suggested by the Court, the election of a Republican President and the resulting changes in the composition of the Board create uncertainty. It is too early to predict whether a Republican-controlled Board will continue the efforts of its Democratic predecessors to limit the availability of the supervisory exclusion.
Regardless of whether the current Board chooses to pursue the Court’s suggestion, the Court’s decision in Kentucky River provides welcome clarity for employers seeking to ensure that their professional and technical staff who perform supervisory functions are excluded from a collective bargaining unit represented by a labor union. The decision confirms that the analysis of supervisory status centers on the degree of authority afforded to the employee, rather than the type of work performed. As a general matter, if a professional or technical employee has authority to exercise one of the twelve supervisory functions enumerated in the statute, and their duties are not clerical or routine in nature, the employee should be excluded from coverage under the NLRA. Although relevant to any workplace employing professional or technical employees, the issue of supervisory status of professional and technical employees arises most frequently in the health care industry where the supervisory status of registered nurses is often in dispute. Moreover, as physicians seek to organize, the Court’s ruling should materially improve the ability of employers to argue that their physicians are supervisors not entitled to be represented by a union.