On October 3, 2006, the National Labor Relations Board ("NLRB") issued a highly anticipated decision in Oakwood Healthcare, Inc., which — along with two companion cases — provides guidance on the definition of "supervisor" under the National Labor Relations Act (the "Act"). This issue is important to employers because supervisors are not considered "employees" under the Act and therefore are not eligible for union membership.

In Oakwood Healthcare, the NLRB determined that the 12 registered nurses ("RNs") who served as charge nurses on a permanent basis were supervisors under the Act because they assigned particular work to their co-workers, and because they used their informed and independent judgment when making these assignments. The NLRB also concluded that the 112 RNs who served as charge nurses on a "rotating" basis were not supervisors because they were not assigned supervisory duties according to an established pattern or a predictable schedule.

Section 2(11) defines a "supervisor" as any individual who has the authority to do, or to effectively recommend, any of the following 12 tasks: hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances. In addition, the exercise of such authority must not merely be of a routine or clerical nature, but must include the use of independent judgment.

Oakwood Healthcare provides direction in the ongoing and heated debate about this definition. Specifically, the NLRB offered guidance on three parts of the "supervisor" definition — what it means to "assign" other employees, to "responsibly direct" them, and to use "independent judgment."

The NLRB held that "assign" means the act of "designating an employee to a place (such as a location, department, or wing), appointing an individual to a time (such as a shift or overtime period), or giving significant overall duties, i.e., tasks, to an employee." However, simply choosing the order in which an employee will perform discrete tasks (e.g., restocking toasters before coffeemakers) is not indicative of the authority to assign. Basically, "assign" means the designation of significant overall duties, not the ad hoc instruction that an employee perform a discrete task.

"Responsibly to direct" means that the supervisor has been delegated the authority to direct others' work and the authority to take corrective action. In addition, there must be some accountability for the performance of others, some prospect of adverse consequences that could result from the supervisor's direction if the tasks are not performed properly.

In explaining "independent judgment," the NLRB stated that judgment is not independent if it is dictated by detailed instructions such as company rules, instructions from a boss, or the provisions of a collective-bargaining agreement.

Moreover, in evaluating whether the "rotating" charge nurses could be considered supervisors, the NLRB reminded that a supervisor must be assigned his or her supervisory duties according to a pattern or schedule, and must spend at least 10-15% of his or her total work time performing the supervisory functions.

The Oakwood decision has been immediately reviled by unions and labor groups as a wholesale expansion of the meaning of "supervisor" under the Act. While it does appear that some employees who assign or direct a limited number of co-workers could now be considered supervisors, the impact is unlikely to be as significant as unions and labor groups suggest. As always, the "supervisor" determination will be a highly fact-based inquiry, dependent on the specific job duties and functions of the employees involved. It is also important to note, however, that the standards outlined above differ significantly from the standards for exempt status under the Fair Labor Standards Act. As a result, the NLRB's decision should not be taken to impact the analysis of whether supervisors are eligible for overtime.