National Mediation Board Revokes Jurisdiction over Airline Service Providers; NLRB Likely to Fill the Vacuum

In Swissport Cargo Services LP, the National Mediation Board drastically altered the labor landscape for airline service providers, abandoning 40 years of precedent, by determining that the Railway Labor Act does not apply to airline service providers and their employees. As a result, the National Labor Relations Board is likely to assert jurisdiction under the National Labor Relations Act over such entities for union representation and unfair labor practice matters, plunging the national airline industry into a mixed labor law model that could result in more operational disruption and labor strife.

The National Mediation Board’s (NMB’s) ruling shifts the legal landscape for companies that provide services to airlines and will require significant, proactive change by both the customers (airlines) and the service providers to address this new reality unless reversed by the incoming Trump-Vance administration.

NMB’S JURISDICTION AND HISTORIC APPLICATION TO AIRLINE SERVICE PROVIDERS AS ‘DERIVATIVE CARRIERS’

The NMB, established by the Railway Labor Act (RLA), is composed of three members who are nominated by the president with the Senate’s advice and consent. Members are appointed for three-year terms but may serve until replaced.

Unlike the National Labor Relations Board (NLRB), the NMB requires RLA-covered employees to organize in system-wide bargaining units (known as “crafts or classes”) rather than in location-specific units. This requirement is intended to avoid localized disruptions in air and rail transportation. The NMB also plays a critical role in promoting peaceful negotiations and preventing disruptions in essential transportation services by prohibiting strikes, lockouts, and other forms of self-help until all avenues of negotiation and mediation have been exhausted and a cooling-off period has expired.

For many decades, the NMB has asserted jurisdiction over “derivative carriers,” entities that provide essential transportation services to their airline customers. Examples include freight, baggage, catering, fueling, maintenance, passenger support, and other related functions necessary for airline operations.

Since the 1980s, the NMB applied a two-part test to determine whether entities that are neither airlines nor railroads are subject to the RLA as derivative carriers. This test asked first whether the employees performed work traditionally done by railroads or airlines. It then asked whether an airline sufficiently controlled the service provider. The factors that determined the requisite control varied over time.

Recently, the NMB typically analyzed (1) the extent of an airline’s control over how the service provider conducts its business; (2) the airlines access to the company’s operations and records; (3) the airline’s role in the company’s personnel decisions; (4) the degree of airline supervision of the company’s employees; (5) whether company employees are held out to the public as airline employees; and (6) the extent of the airline’s control over employee training.

NMB’S RECENT SWISSPORT RULING ELIMINATED DERIVATIVE CARRIER TEST FOR AIRLINE SERVICE PROVIDERS

On March 23, 2022, the International Association of Machinists and Aerospace Workers, AFL-CIO (IAM) filed a petition with the NLRB seeking to represent all full and part-time cargo handling and warehouse employees employed by Swissport at Newark Liberty International Airport (EWR). The Service Employees International Union, Local 32BJ (SEIU), intervened based on a separate showing of interest among the petitioned for employees. The IAM and the SEIU contended that Swissport’s operations and employees at EWR are subject to National Labor Relations Act (NLRA) jurisdiction, while Swissport argued that its EWR operations and employees are subject to RLA jurisdiction.

In July 2022, Region 22 of the NLRB issued a Decision and Direction of Election (DDE), finding that Swissport is subject to NLRA jurisdiction and that Swissport’s sole customer at EWR, United Airlines, does not have sufficient control over Swissport’s EWR operations. After Swissport filed a Request for Review, the NLRB referred the case to the NMB for an advisory opinion on jurisdiction.

In the Swissport ruling, the NMB abandoned the derivative carrier test—effectively retreating from RLA regulation of airline service providers. In a 2-1 opinion with a vigorous dissent, the NMB explained that it analyzed the plain statutory language and found that, almost 90 years ago, Congress failed to fully align the railroad and airline jurisdictional definitions in the statute; the derivative carrier doctrine emanated from railroad and not airline jurisdiction language; and, absent congressional intervention, the NMB decided to cease RLA jurisdiction over airline service providers by eliminating the derivative carrier category for such entities.

The statute itself provides that the RLA applies to every “common carrier by air”—i.e., airline—and “every air pilot or other person who performs work as an employee or subordinate official of such carrier or carriers, subject to its or their continuing authority to supervise and direct the manner of rendition of his service.” [1] The NMB in Swissport emphasized the plain language of the statute, holding that its words are “clear and unambiguous” and “simply cannot be read to extend the RLA’s jurisdiction to independent contractors that contract to provide services with an air carrier.” [2]

The NMB added that while airline employees are organized in system-wide bargaining units, including every person who performs the same work no matter their work location, these factors do not extend to companies contracting with airlines. [3] As a result, the NMB found that there is no community of interest necessary to establish a stable system-wide craft or class, and that the dispute resolution mechanism of the RLA, centered on representation and meditation on a system-wide basis, is not suitable to address disputes of “disparate, dispersed, decentralized workforces” like Swissport’s operations and employees at EWR versus other airport locations. [4]

IMPACT ON NLRB PROCEEDINGS

Since 2021, NLRB General Counsel Jennifer Abruzzo has required mandatory submissions to the Board’s Division of Advice regarding cases that involve disputes over NLRA and RLA jurisdiction, which suggests that she has sought to revisit the NMB’s jurisdictional scope. Not only does RLA jurisdiction result in a different representational and bargaining scheme compared to the NLRA, but also the NMB has no unfair labor practice investigatory or prosecutorial apparatus like the NLRB. Unions often view the NLRA to be preferrable to the RLA.

We anticipate that the NLRB will, going forward, accept jurisdiction over all airline service providers based on Swissport, without first referring the case to the NMB for an advisory opinion. Notably, on December 10, 2024, the NLRB deferred to the NMB’s determination in this case and asserted NLRA jurisdiction over the service provider. [5]

ANTICIPATED LANDSCAPE IN 2025

In 2025, airline service providers should prepare for a radically altered labor landscape under NLRB jurisdiction. Such an expansion will impact organizing activity, potentially increase labor disruptions, and create uncertainty for employers and their airline customers. Specific examples of predicted consequences include the following.

Increase in Organizing Activity Due to Smaller Bargaining Units

Expanded NLRB jurisdiction will likely cause an increase in organizing activity overall, as employees would no longer be required to organize employees within a system-wide craft or class. Instead, employees will be able to organize on a smaller, local level as the NLRB presumes a union’s petitioned-for unit is appropriate so long as it consists of a clearly identifiable group of employees who share a community of interest. The burden to show that a petitioned-for unit is inappropriate would then fall squarely on the employer.

Employers will also need to respond to union demands for recognition pursuant to Cemex, [6] under which the NLRB requires an employer to either recognize the union or “promptly” file its own petition to test the union’s majority status or the appropriateness of the unit under expedited election timelines.

Increase in Labor Disruptions and Strike Activity

Under the RLA, unions and employers in the airline industry follow a distinct process for collective bargaining and labor relations that is designed to reduce disruptions in service and promote peaceful negotiations, including a government-mandated release and cooling-off period before strikes or lockouts can occur.

As the dissent in Swissport notes, the NMB ceding jurisdiction over essential transportation work will likely increase the risk of work stoppages within the industry and disruptions to air transportation. A strike by a contractor’s employees at one airport could have ripple effects throughout all of an air carrier’s operations nationwide.

PRACTICAL TAKEAWAYS FOR AIRLINES AND AIRLINE SERVICE PROVIDERS

In response to the Swissport ruling, and absent a change by the Trump-Vance administration or Congress in 2025 or thereafter, airlines and airline service providers should consider the following actions:

• Review relevant commercial contracts that were entered against the backdrop of RLA jurisdiction for airline service providers to account for the possibility of localized operational disruptions due to labor disputes.
• Determine whether airlines will in-source certain functions in order to maintain RLA coverage.
• Address possible overtime implications for service provider workers if the RLA-based exemption from the Fair Labor Standards Act is no longer applicable.
• Negotiate changes to collective bargaining agreements for already unionized airline service provider operations to account for differences in NLRA coverage. This could include modification of recognition clauses, contract reopening procedures, no strike provisions, grievance-arbitration procedures, contract duration, and other terms that often differ between NLRA and RLA-covered operations.
• Assess the likely scope and composition of potential local bargaining units under the NLRA.
• Review airline service provider employee handbooks and policies for NLRA compliance given the prospect of new unfair labor practice charges (which did not exist under RLA coverage).