The Changing Labor Landscape for Healthcare Employers
In 2024, healthcare employers have faced several new challenges and developments regarding traditional labor obligations. Unions are becoming more prominent in healthcare, including by unionizing doctors at unprecedented rates and by becoming more involved in government-funded projects. At the same time, federal agencies are imposing significant new labor obligations on healthcare employers, regardless of whether or not they have unions representing their employees. While the Federal Trade Commission’s non-compete rule has garnered major attention (as we discussed further here and here), the National Labor Relations Board has its own new positions on restrictive covenants which arguably impact healthcare employers even more than the FTC rule.
These issues are covered further below. For those interested in more detail, Squire Patton Boggs’ Healthcare Industry Group and Labor and Employment Practice Group will be discussing these developments at two upcoming webinars in October. Those interested in a healthcare-focused employment law update should join us on October 22 for our webinar entitled Emerging Issues in the Healthcare Industry: What Healthcare Employers Need to Know by clicking this registration link. Those interested in more detail specifically about labor law and labor union developments should attend our webinar on October 8 entitled Labor Law’s New Landscape: How Another Year of Groundbreaking Changes Will Affect Non-Union and Unionized Employers at this registration link.
- The Rise of Doctors’ Unions
Over the past two years, doctors have started unionizing at a rapidly increased pace. There are now over 10,000 union-represented doctors in the U.S. They are not solely organizing in small groups, either. In early 2024, the National Labor Relations Board certified a Minnesota union as representing over 100 doctors at various hospitals.
This trend has stemmed from several factors. The NLRB has changed the law in several ways recently which made it easier for employees to organize. The NLRB’s decision last year in Cemex Construction Materials Pacific made it easier for unions to represent new groups in multiple ways. In American Steel Construction, the NLRB reinstated unions’ ability to organize “micro units,” i.e., small groups that can help a union establish a presence at a workplace where a larger group might have rejected the union. The NLRB also has expanded unions’ rights, and imposed new limits on employers, in several other recent ways. As one telling statistic, in 2023, unions won 86.7% of representation elections involving healthcare employees (according to Bloomberg Law).
The rise of unionized doctors did not stem solely from legal changes, however. Doctors have had the right to unionize for decades, so long as they do not constitute “supervisors” (as federal labor law narrowly defines the term) and so long as they work for entities covered by the National Labor Relations Act (which is the case for most healthcare facilities and other private sector employers). Rather, this trend appears to result significantly from morale and operational issues. Where healthcare employers reallocate supervisory duties from doctors to administrators, they make it easier for doctors to show they are not “supervisors” and, therefore, retain the right to organize under the NLRA. Several newly unionized doctors also have cited their coworkers’ activities as motivating them to organize. For example, in one recent high-profile organizing campaign, doctors stated that they sought to unionize because they felt emboldened by recent strikes and organizing from unionized nurses and physicians’ assistants.
- The NLRB’s Positions Against Non-Competition, Non-Solicitation, and Confidentiality Agreements
While the FTC’s non-compete rule has drawn major attention recently, the NLRB’s new positions regarding non-competes and other restrictive covenants arguably create greater consequences for employers. The FTC’s rule currently is enjoined (as of September 10), but the NLRB is actively prosecuting Complaints against employers who maintain non-competes and non-solicitation agreements against non-supervisory employees. The NLRB General Counsel has deemed it unlawful for employers to maintain these types of agreements with non-supervisory employees – or even request them – except perhaps in very narrow situations concerning employees who have uniquely important proprietary information.
The full NLRB itself has not yet accepted the General Counsel’s position, but the General Counsel is actively enforcing her position. This is particularly significant because the NLRB has far more flexibility than the FTC to seek monetary damages and other relief from employers who maintain (or even propose) restrictive covenants that are deemed unlawful.
Perhaps more importantly, the NLRB has deemed it unlawful for employers to enter into – or even request – confidentiality or non-disclosure agreements in several types of situations for NLRA-covered employers. The NLRB historically has deemed it unlawful for employers to prohibit – or discourage – non-supervisory employees from discussing their terms of employment with third parties. However, the NLRB is now advancing this position in new ways. For example, the NLRB has deemed it unlawful for an employer to request (or enter into) a severance or settlement agreement that broadly prohibits a non-supervisory employee from discussing all of the terms of the settlement or severance. The NLRB also deems it unlawful to seek any type of non-disparagement provision from a non-supervisory employee.
These enforcement positions disproportionately impact healthcare employers. Because many doctors are not “supervisors” under the NLRA, the NLRB’s enforcement position against these agreements would protect many doctors and, according to the NLRB’s General Counsel, render their non-competes unlawful. Further, because healthcare employees encounter more sensitive information than employees in most other industries, and because healthcare employers invest more in training and professional development than most other employers in the U.S., the NLRB’s positions can create greater consequences for healthcare employers. As the NLRB continues to pursue enforcement actions against employers concerning restrictive covenants, it is critical that healthcare employers understand the NLRB’s position and evaluate their options for protecting their interests.
- Other Recent Labor Rule Changes Disproportionately Impacting Healthcare Employers
Even beyond the new positions above, the NLRB and other agencies have created several new rules recently that are having a disproportionately large impact on employers in the healthcare industry. For example:
- Prohibiting several common types of employment policies. In Stericycle, the NLRB changed its standard for when it is unlawful for an employer to even maintain a policy which arguably limits employees’ protected concerted activity. This new standard creates significant risks for employers who wish to maintain common types of policies, including policies prohibiting “insubordination,” “disruptive,” “offensive,” or similar types of “unprofessional” behavior. Where it is particularly important for healthcare employers to instill confidence in the people receiving their services, this makes it particularly important to understand the NLRB’s current positions on employment policies.
- Expanding employees’ rights to post materials in the workplace. Last month, in Intertape Polymer Group, the NLRB deemed it unlawful for an employer to categorically prohibit employees from posting their own materials “anywhere on [the employer’s premises].” The NLRB reasoned that this type of language would unlawfully deter an employee from posting pro-union material on their own personal property in the workplace, such as on a lunch pail. Although employers technically may prohibit employees from posting their own materials on the employer’s bulletin boards (so long as the employer issues that rule for lawful non-union reasons and enforces that rule in a non-discriminatory way), this decision narrows the types of language an employer may use to accomplish that without risking violating the NLRA. This is yet another legal issue which healthcare employers must account for when determining how they can manage employee conduct and maintain trust from patients and partners.
- Requirements to engage with unions on government-funded projects. Earlier this year, a new rule became effective which requires federal agencies to pursue union contracts or other union-supporting measures on federally funded construction projects. This rule requires agencies to seek project labor agreements (which are essentially collective bargaining agreements that cover entire projects or large portions of projects) on construction projects that use federal funding and exceed $ 35 million in cost. At the same time, over the past three years, the federal government has allocated over $ 1 trillion to constructing and renovating healthcare facilities. Healthcare entities who are seeking federal funds or preparing to fund new construction must ensure they understand and account for the new union-related obligations that may stem from their projects.
- Union representatives gaining increased access to enter healthcare premises. Earlier this year, OSHA implemented a new rule that expands union’ rights to access healthcare facilities (and other workplaces). This rule, which became effective on May 31, permits OSHA inspectors to allow union representatives to accompany them on inspections, if the inspector believes the representative will aid the inspection in some way. At the same time, the Stericycle decision narrowed employers’ options if they seek to prevent employees form allowing union organizers onto the employer’s property. Both of these developments are subject to pending challenges in federal court. Healthcare employers should ensure they account for these obligations, and monitor the pending challenges, as they determine how and when third parties may access their premises.