On December 14, 2017, the National Labor Relations Board discarded its longstanding rule that facially neutral employer rules are unlawful if an employee would “reasonably construe” the rule as prohibiting an employee from engaging in protected, concerted activity under Section 7 of the National Labor Relations Act (NLRA). Moving forward, the Board held, it will balance the employer’s justification for the rule against the impact on NLRA rights, and take into account the facts and circumstances including the relative importance of the employer’s justification, the particular work setting or event, and the importance of the NLRA right at issue. This decision overrules 13 years of precedent, and offers some measure of respite to employers stumped by the Board’s past approach to evaluating handbooks, social media standards, technology policies, conduct rules, and other common workplace policies.
At the conclusion of the Obama presidency there remained two open seats on the National Labor Relations Board (“NLRB”). The five member panel operated with two Democrats and one Republican for a significant period of time given the refusal of the Republican Senate to move on confirmation of President Obama’s nominees. Normally, the Board contains three members of the sitting President’s party. Even with only three members, two Democrats, the Board issued many decisions impacting labor/management relations including sweeping pronouncements regarding employee use of social media and employee handbook policies. The NLRB is charged with enforcing the National Labor Relations Act (“NLRA”), which guarantees the right of most private sector employees to organize and to engage in “concerted activity” which includes discussing the terms and conditions of their employment with one another and the public. Many decisions coming out of the Board over the past eight years are viewed as having increased regulation on private sector employers and limiting the ability of private employers to manage their workforces as they see fit.
President Trump took a step toward filling the board by nominating Republican Marvin Kaplan to one of the seats. Kaplan, a former labor and employment attorney, currently serves as counsel at the Occupational Safety and Health Review Commission. He has significant experience with the issues expected to come before the board. Senate representatives indicate that they plan to take up his nomination quickly. President Trump is also likely to nominate someone to the fifth seat quickly in order to establish a Republican majority on the Board. Employers should expect to see a rollback of some of the Obama era policies in the near future.
On March 24, 2017, the United States Court of Appeals for the District of Columbia Circuit in Banner Health System v. NLRB, 851 F.3d 35 (D.C. Cir. 2017) again declined to rule on the National Labor Relations Board’s (“NLRB” or “Board”) position that employers cannot prohibit discussions of matters under investigation absent a specific, case-by-case determination supporting the need for confidentiality. As a result, the Board’s position that employers violate Section 8(a)(1) of the National Labor Relations Act (NLRA) by restricting such discussions absent case-specific evidence that “witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up” continues in force, with no clear disapproval from the courts. Continue Reading NLRB’s Case-By-Case Scrutiny Standard For Investigative Confidentiality Rules Continues
Ernst & Young, LLP, a global professional services firm, made an effort to stem the tide of challenging and expensive class action litigation by including in their employment agreements a clause by which employees waive their rights to file work-related claims as a collective group. The contracts require employees to arbitrate claims individually. Ernst & Young followed the actions of a number of companies large and small which are increasingly requiring employees to sign these waivers. Not only do such waivers purport to save employers a lot of money which would be used to defend class actions, they may very well dissuade employees from filing individual claims which might be costly and difficult to pursue on their own, especially if relatively small amounts of money are at issue.
In ruling this week, the 9th Circuit Court of Appeals became the second federal appellate court to bolster the NLRB’s position that such waivers are unenforceable and violate the National Labor Relations Act (the “Act’). The Act guarantees employees the right to engage in concerted activity which includes filing legal action against an employer as a group. It is noteworthy that two Circuit Courts have gone the other way, ruling that such waivers are indeed enforceable. This leads to the conclusion that this issue will end up before the United States Supreme Court for final resolution.
The case before the 9th circuit was brought by two former Ernst & Young employees who alleged on behalf of the purported class that the company failed to pay overtime in accordance with federal and state law. The court did not rule that arbitration clauses in and of themselves were unenforceable as to individual claims, only that the employees were entitled to pursue a class action on behalf of themselves and other similarly situated employees.
The case is Morris v. Ernst& Young, 9th U.S. Circuit Court of Appeals, No. 12-16599.
The Los Angeles office of the National Labor Relations Board (“NLRB”) issued a Complaint based on an unfair labor practices charge brought by the International Brotherhood of Teamsters (“Teamsters”) against Intermodal Bridge Transport, a California company in the logistics and transport business. The original charge was filed in August of 2015 and amended twice since.
The Complaint, scheduled to be heard by an Administrative Law Judge in June, alleges, among other things, that the employer’s classification of its delivery drivers as independent contractors constitutes an unfair labor practice under Section 8(a)(1) of the National Labor Relations Act (the “Act”). The argument is based on the claim that misclassification inhibits individuals who would otherwise be employees from engaging in their Section 7 rights to concerted activity including unionizing.
Of particular interest is the fact that this action appears to be based on the advice provided in Memorandum GC 16-01 issued by the NLRB’s General Counsel on March 22, 2016. There, the General Counsel directed Regional Directors and others in charge of enforcing offices to prioritize certain “cases that involve the General Counsel’s initiatives or policy concerns.” Among those listed are “cases involving the question of whether the misclassification of employees as independent contractors violates Section 8(a)(1).”
For companies which utilize the services of independent contractors, this action presents one more potential front on which the misclassification war may be waged. This is in addition to state and federal agencies which include, the United States Department of Labor, the Internal Revenue Service, state departments of labor and state unemployment offices. As we have long stated, be wary of classifying workers as independent contractors; the tests are difficult to meet, and the penalties are severe.
On March 18, 2015, the General Counsel of the National Labor Relations Board (“NLRB”) issued a report setting out the NLRB’s view on employee handbook policy language.
Section 7 of the National Labor Relations Act, which is enforced by the NLRB, protects employees’ rights to engage in certain protected activities. As explained in the report, protected activities include:
- Discussing wages, hours, and other terms and conditions of employment with fellow employees as well as with nonemployees such as union representatives.
- Criticizing or protesting the employer’s labor policies or treatment of employees.
- Arguing and debating among employees about unions, management, and terms and conditions of employment.
- Communicating with the news media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment.
- Taking photographs and making recordings in furtherance of protected concerted activity.
- Going on strike.
- Engaging in concerted activity to improve their terms and conditions of employment, even if that activity is in conflict with the employer’s interests.
The report clarifies what handbook language, in the NLRB’s view, violates employees’ Section 7 rights. Highlights of the report include the following:
A confidentiality policy violates the Act if it specifically prohibits employees from discussing the terms and conditions of their employment or reasonably would be read to prohibit such discussions. The scope of confidential information should be defined sufficiently to make clear that “confidential information” does not include information relating to the terms and conditions of employment.
Policies Regulating Employee Conduct Toward the Company and Supervisors
Rules that specifically ban or reasonably would be interpreted to ban employees from criticizing the employer or management are unlawful, absent sufficient clarification or context. An employer may lawfully require employees to be respectful and professional to individuals other than the employer or management. (e.g., coworkers, clients, competitors, and members of the public).
Policies Regulating Employee Conduct Towards Coworkers
Language that broadly prohibits discussions among employees of negative, inappropriate, controversial, or otherwise “inflammatory” subjects may be unlawfully overbroad absent clarification of the intent of the policy.
Policies Regulating Employee Communication with Third Parties
A handbook rule which prohibits or reasonably would be interpreted to prohibit employees from discussing terms and conditions of employment with third parties would be considered unlawful.
Policies Regulating Employee Use of Company Logos, Copyrights, and Trademarks
An employer may not prohibit employees’ use of the employer’s logos, copyrights, or trademarks for non-commercial purposes. While acknowledging that an employer’s intellectual property rights are protected by law, the NLRB takes the position that “[e]mployer proprietary interests are not implicated by employees’ non-commercial use of a name, logo, or other trademark to identify the employer in the course of Section 7 activity.”
Policies Restricting Photography and Recording
A total ban on employees’ right to take photographs or make recordings, including the use or possession of personal cameras or recording devices, is unlawful. Language should appropriately limit the scope of the prohibition so that it would not be read to prohibit taking photographs or making recordings in furtherance of protected concerted activities.
Policies Restricting Employees from Leaving Work
A rule restricting employees from leaving work is unlawful if it contains language that prohibits or would be read to prohibit protected strike actions and walkouts.
A conflict-of-interest rule is unlawful when it prohibits or reasonably would be read to prohibit employees from engaging in concerted activity to improve their terms and conditions of employment. This right is protected even if the activity is in conflict with the employer’s interests, such as protesting in front of the employer’s building, organizing a boycott, and soliciting support for a union while on non-work time.
The key to making sure your employee handbook will pass muster if reviewed by the NLRB is to avoid using overly broad language and to provide sufficient clarification and explanation. The NLRB will examine lawfulness of a handbook policy based on what it says as well as how it would reasonably be read by employees. Employers are encouraged to review the General Counsel’s report. It offers examples of language that the NLRB has found lawful and unlawful. It is also recommended to have legal counsel review the handbook to ensure compliance with the Act.
Employees’ rights to act together to address conditions at work are protected under the National Labor Relations Act. This protection applies equally to both union and non-union employees and extends to employees’ work-related conversations on social media. But, as many employers may wonder, how far does the protection of the Act reach? The NLRB’s decision in Richmond District Neighborhood Center and Ian Callaghan (Case 20-CA-091748, October 28, 2014) provides some guidance on it.
The US Supreme Court recently found President Obama lacked the authority to make 3 recess appointments to the National Labor Relations Board in January 2012. It held the appointments invalid because the Senate was not in a “recess” at the time but rather was holding pro forma sessions every three days for weeks in a row. NLRB v. Noel Canning (6/26/2014).
In Noel Canning, the Supreme Court unanimously affirmed a federal appeals court decision finding an NLRB order against an employer invalid because the board lacked a quorum. Because the recess appointments in 2012 violated the Constitution, 3 of the 5 members of the board had no authority to act. The decision followed the Supreme Court’s earlier ruling in New Process Steel LP v. NLRB, 130 S. Ct. 2635 (2010), where it held the NLRB board cannot act with fewer than 3 members.
How this decision will impact other NLRB decisions remains to be seen. NLRB Chairman Mark Gaston Pearce issued a statement indicating that they are ” analyzing the impact that the Court’s decision has on Board cases in which the January 2012 recess appointees participated.” About 700 published and unpublished NLRB decisions were issued between January 2012 and August 2013 by votes of the recess appointees. Some of those decisions modified or overruled prior precedent, including the Banner Health System case restricting general confidentiality requirements during internal investigations, which my colleague Charla Stevens discussed in an earlier post.
It is expected that many who lost a case during that time period will ask to be reheard. Some predict, however, that the Democratic majority on the current Board may not result in any changes of opinions. And other decisions made by those recess appointees – for example any regional director appointments or authorizations given to General Counsel – will likely be challenged as well.
At issue in Noel Canning was the interpretation of the US Constitution’s recess-appointments clause. The clause, in Article II, reads:
The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.
While unanimous in finding the appointments invalid, the Court divided 5-4 on defining the powers of a president to make recess appointments that normally require the consent of the Senate. Justice Breyer who wrote the majority opinion, joined by Justices Kennedy, Ginsburg, Sotomayor, and Kagan found that the president may make appointments without Senate confirmation during recesses but cannot act during Senate recesses of less than three days, and “presumptively” cannot make a recess appointment during a recess of less than 10 days. Justice Scalia, joined by Chief Justice Roberts and Justices Thomas and Alito, wrote a concurring opinion and argued that the language only allows recess appointments between Senate sessions and then limited only to vacancies that arise during the recess between Senate session in which they are filled.
At this point, we will wait and see what happens to the decisions made in that 20 month period.
An administrative law judge (“ALJ”) writing on behalf of the National Labor Relations Board (“NLRB”) reviewed the social media/on line communications policy of The Kroger Co. of Michigan, a retail grocery chain, in the context of an unfair labor practices complaint. In the decision issued on April 22, 2014, the ALJ ruled that portions of Kroger’s policy were unlawfully broad and in violation of Section 7 of the National Labor Relations Act.
If you identify yourself as an associate of the Company and publish any work-related information online, you must use this disclaimer: “The postings on this site are my own and do not necessarily represent the postings, strategies or opinions of The Kroger Co. family of stores.”
It is fairly common for employers to establish policies requiring that employees use disclaimers of this nature when posting on line. The ALJ, however, stated that “there is no question but that this rule implicates much Section 7 activitiy. While not all work-related information is potentially protected by Section 7, a great deal of it is.”
The ALJ conceded that an employer has a legitimate interest in stopping unauthorized employees from speaking on behalf of the company and even from being perceived as speaking on behalf of the company. He determined that in evaluating the employer policy, it was necessary to consider what the risk is that, in the absence of a disclaimer, section 7 activity, i.e. discussing the terms and conditions of employment, would be mistaken for employer sanctioned speech. The ALJ concluded that a disclaimer is problematic under the Act if it is likely to chill legitimate and protected employee speech.
In striking down the disclaimer language the ALJ stated that “Given the breadth of online communications to which the rule applies, it would be extremely burdensome to have to post the disclaimer in each instance or on each new page, and this would have a reasonable tendency to chill Section 7 activity in this regard.” The Decision itself is worth the read in that it gives startling insight into the reasoning of at least this one ALJ.
Again in the spotlight, the National Labor Relations Board punted the ball down field in a ruling that stunned the college sports world. The NLRB Regional Director, Peter Sung Ohr, ruled last month that the Northwestern University scholarship football players were employees. As employees, the players may vote to unionize. The impact of this decision on collegiate sports is significant.
In a 24 page decision, Ohr found the scholarship athletes were employees because they were compensated by the school and under the strict and exacting control of the school. Ohr’s decision highlighted the substantial amount of revenue the players bring into the university and the benefits they add in allowing the school to have a national reputation. He found the monies received by the players in scholarship were not for financial aid to attend the university but instead to pay them for playing football. Ohr also spent time reviewing the hourly and daily control the university has over the players’ lives, which he found was the type of control you would see an employer have over an employee. He noted that the players adhered to schedules for workouts, practices, meetings, and studies; the players were subject to special rules; the players needed approval for living arrangements and time spent off campus; Ohr also noted the 40 to 50 hours per week devoted by the players to football-related activities.
Ohr distinguished the facts in the football player matter from those in Brown Universtiy, 342 NLRB 483 (2004). In Brown University, the NLRB found that graduate student assistants were primarily students and not employees. Ohr held that contrary to the graduate assistants, the scolarships for football players at Northwestern were not primarily for their roles as students or for a core element of their education. He also noted that the football players were not overseen by members of the academic faculty.
Finding the scholarship football players employees, Ohr ruled that the players shall conduct an election by secret ballot to vote on whether the players desire to be represented for collective bargaining purposes by the College Athletes Players Association (CAPA). An election is set for April 25th.
Taking the ball and running with it up the field, Northwestern appealed the decision to the full NLRB Board in Washington, DC, by the April 9th deadline. On appeal, Northwestern alleges a host of errors by the Regional Director, including, inter alia, that the NLRB ignored the Brown University precedent, relied too heavily on the testimony of one athlete, and ignored key evidence supporting the student activities of the athletes during the year. Northwestern contends that there was overwhelming evidence that its football program is “fully integrated with its academic mission, and that it treats its athletes as students first.”
Whether Northwestern returns the ball to the end-zone and successfully over-turns the decision or is stopped short of it, it appears this case is headed to the United States Supreme Court.