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NEW DEVELOPMENTS UNDER THE NATIONAL LABOR RELATIONS ACT

Kay H. Hodge1/

Stoneman, Chandler & Miller, LLP

Introduction

This outline summarizes some of the issues arising under the National Labor

Relations Act (“NLRA” or “Act”) for non-union employers.2/ It does not address many

of the complexities of labor law and is not intended to be a substitute for the advice of

legal counsel in specific situations.

Applicability of the NLRA

1. Definition of Employer.

The NLRA applies to non-union employers, as well as to unionized employers.

The National Labor Relations Board (“NLRB”) exercises jurisdiction only over those

private employers engaged in interstate commerce based on the employer’s annual

revenues and its interstate activity as determined by purchases from outside the state. In

most non-retail and non-service industries, the Board asserts jurisdiction over businesses

with a gross volume of business of $250,000, or $500,000 for retail and service

establishments, and which purchase at least $50,000 of goods and services originating

outside of the Employer’s state. See NLRB’s Standards to Exercise of Jurisdiction, 42

LRRM 96 (1958) and http://www.nlrb.gov/rights-we-protect/jurisdictional-standards.

1/Ms. Hodge thanks Geoffrey Bok, John Simon and Katherine Clark, all partners at Stoneman,

Chandler & Miller, LLP, for their contributions to this article. 2/ A comprehensive review of the law under the NLRA can be found in The Developing Labor

Law, (John E. Higgins, Jr., Editor in Chief) (6th ed. 2012) published by Bloomberg BNA.

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2. Definition of Joint Employers.

Browning-Ferris Industries of California, Inc. (“BFI”) operated a recycling

facility. BFI solely employed approximately 60 employees working mainly outside its

facility moving materials and preparing them to be sorted inside the facility and who are

represented by a union. Inside the facility, approximately 240 full-time, part-time and

on-call workers provided by Leadpoint Business Services sort the material, clean sorting

equipment and are housekeepers. BFI and Leadpoint have a temporary labor services

agreement (“Agreement”), which can be terminated by either party with 30 days’ notice

and states that “Leadpoint is the sole employer of the personnel it supplies, and that

nothing in the Agreement shall be construed as creating an employment relationship

between BRI and the personnel that Leadpoint supplies.” Browning –Ferris Industries of

California, Inc. (“BFI”), 362 NLRB No. 186 at 3 (August 27, 2015). Leadpoint and BFI

each had separate management and supervisory personnel and human resources

departments. In the Agreement, BFI required and Leadpoint agreed to provide qualified

personnel who met or exceeded BFI’s standard selection procedures and tests, including

eligibility to work and successful passage of a drug screening test. The Agreement also

gave Leadpoint the “sole responsibility to counsel, discipline, review, evaluate and

terminate personnel who are assigned to BFI.” Id. at 4. However, BFI had the authority

to “reject any Personnel, and…discontinue the use of any personnel for any or no

reason.” Although the Agreement gave Leadpoint authority over wages paid to its

employees, it could not pay more than BFI for full-time employees performing similar

tasks without BFI’s permission. Benefits were provided by Leadpoint and each

Leadpoint employee was required to sign a waiver stating that they were only eligible for

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Leadpoint benefits, not BFI. BFI dictated the number of employees to be assigned to

work at its facility, the schedule of working hours, breaks, and overtime, the speed of the

stream, and required that an authorized BFI representative sign off on a Leadpoint

employee’s hours of services. Both BFI and Leadpoint provided some training.

However, Leadpoint was required to comply with BFI’s safety policies, procedures, and

training requirements.

Based on the above facts, the NLRB revisited and revised a 30-year joint-

employment standard by “returning” to the standard articulated by the Third Circuit in

Browning-Ferris Industries of Pennsylvania, Inc., 691 F.2d 1117 (3d Cir. 1982), enfg.

259 NLRB 148 (1981).3/ The NLRB’s decision overrules decisional authority that

limited joint employment to those cases in which there was evidence of “direct and

immediate” control by the alleged joint employer.4/ Now, joint employment may be

found when there is “indirect” or “reserved” control or authority.

In making its determination, the NLRB cited the increasing use of contingent

workers and use of workers in the temporary help services industry and its responsibility

“ to adapt the Act to the changing patterns of industrial life.” NLRB v. J. Weingarten,

Inc., 420 U.S. 251, 26 (1975). In applying the “new” test, the Board made clear that the

3/ The Board expressed its desire to return the reasoning contained in earlier cases

such as Greyhound Corp., 153 NLRB 1488, 1495 (1965), enf’d 368 F.2d 778i (5th Cir. 1966). See also Franklin Simon & Co., Inc., 94 NLRB 576, 579 (1951) (joint employment status found where “a substantial right to control over matters fundamental to the employment relationship [was] retained and exercised” by both the department store and the company operating shoe department).

4/ See e.g. TLI, Inc. 271 NLRB 798 (1984, enfd. mem. 772 F.2d 894 (3d Cir. 1985); Laerco Transportation, 269 NLRB 324 (1985); AM Property Holding Corp., 350 NLRB 998, 1000 (2007), enf’d in relevant part sub nom. Service Employees Int’l Union, Local 32BJ v. NLRB, 647 F.3d 435 (2d Cir. 2011); Airborne Express, 338 NLRB 597, 597 note 1 (2002) (requiring “direct and immediate “ control). Id. at 16.

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mere existence of a common-law employment relationship would not be sufficient to find

joint employment.5/ It would also look to the full range of the employment relationship to

determine whether meaningful collective bargaining was possible. Hence, the NLRB

found that

…two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating the allocation and exercise of control in the workplace, we will consider the various ways in which joint employers may “share” control over terms and conditions of employment or “codetermine” them, as the Board and the courts have done in the past.

Id. at 15. The Board suggested that it would look at the entire factual context of the

employment relationships and use a “nuanced” approach in assessing and weighing the

facts. The test articulated in BFI has essentially two parts: 1) whether there is a

common law employment relationship, and 2) whether the alleged joint employer

possesses sufficient control over the essential terms and conditions of employment so that

meaningful collective bargaining can take place.

Two of the five Board Members (Members Miscimarra and Johnson) wrote a

vigorous dissent which the majority labeled as “long and hyperbolic… [that] persistently

mischaracterizes the standard we adopt today and grossly exaggerates its

consequences…” Id. at 20. The dissenters suggest that the Board’s decision in BFI will

lead to instability in bargaining by introducing conflicting interests on the employer’s

side and would alter the relationships between contractors and subcontractors, parent and

subsidiary, franchisor and franchisee, etc. It could also expand liability for unfair labor

5/ It specifically noted that “[w]here a user has reserved authority, we assume

that it has rationally chosen to do so, in its own interest. There is no unfairness, then, in holding that legal consequences may follow from this choice.” BFI, 362 NLRB No. 186 at 14.

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practices and breaches of collective bargaining agreements and subject the joint

employers to what has historically been treated as unlawful secondary activity.

As the decision in BFI was prospective, the implications of the NLRB’s change to

joint employment will depend on judicial review and future cases.6/

3. College Athletes Who Receive Grant-in-Aid.

In a case that drew significant national interest, the NLRB unanimously reversed

a Regional Director’s decision finding that Northwestern University football players who

receive grant-in-aid scholarships were statutory employees within the meaning of the Act

and directed an election. 7/ The NLRB did not determine whether the players were

statutory employees under the Act, but rather in the exercise of its discretion declined to

assert jurisdiction over the group and dismissed the representation petition.

6/ Legislation has been introduced in Congress to reverse the “indirect control” test by adding to the definition of employer in Section 2(2) of the Act a requirement that joint employment may be found only when “each [employer] shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.” See Protecting Local Business Opportunity Act (H.R. 34569, S. 2015). If passed, the legislation will likely be vetoed by the President.

7/ Section 2(3) of the Act defines an “employee” as follows:

The term “employee” shall include any employee, and shall not be limited to the employees of a particular employer, unless the Act explicitly states otherwise, and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice, and who has not obtained any other regular and substantially equivalent employment, but shall not include an individual employed as an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse, or any individual having status of an independent contractor, or any individual employed as a supervisor, or any individual employed by an employer subject to the Railway Labor Act [45 U.S.C. § 151 et seq.], as amended from time to time, or by any person who is not an employer as herein defined.

29 U.S.C. § 152(3).

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The NLRB held that asserting jurisdiction would not promote labor stability due

to the nature and structure of the NCAA Division I Football Bowl Subdivision (“FBS”).

The NLRB noted where it had asserted jurisdiction in the sports arena, it had done so

over entire leagues. In this case, however, the petition sought to organize only

Northwestern players. The Board, therefore, considered that the vast majority of FBS

teams (approximately 108 out of 125) would not be subject to the NLRB jurisdiction as

they are operated by state run colleges and universities which are statutorily exempt from

the NLRB’s jurisdiction. Further, in the Big Ten, Northwestern is the only private, non-

public institution.

In declining to exercise jurisdiction in this case, the Board made clear that its

decision was limited to the facts presented and would not preclude consideration of the

issue in a future case.

Basic Rights Protected by the NLRA

The rights of employees under the Act are enumerated in Section 7, which

provides:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized by section 8(a)(3).

29 U.S.C. § 157.

Section 7 rights are enforced through the prohibition of certain conduct by either

employers or unions called unfair labor practices. Prohibitions on employer conduct are

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contained in Section 8(a) of the Act, and prohibitions on the conduct of a labor

organization are in Section 8(b).

Section 8(a)(1) – Interference, Restraint or Coercion of Rights Protected by Section 7

Section 8(a)(1) makes it an unfair labor practice for an employer “to interfere

with, restrain or coerce employees in the exercise of rights guaranteed by section 7 [29

U.S.C. § 157].” In addition to independent violations of § 8(a)(1), which will be

discussed in this section of the outline, a violation of any of the other four subsections of

section 8 is also a violation of § 8(a)(1).

The type of conduct that will result in unlawful interference, restraint or coercion

and lawful conduct often is elusive. Contributing to the difficulty of predicting in any

given situation whether it will be lawful or not is the composition of the Board, the

particular Circuit Court hearing the appeal, and the inevitable differences in facts and

circumstances.

In the NLRB’s view motive is not an essential element of a § 8(a)(1) violation. It

follows a “well settled” test:

Interference, restraint, and coercion under Section 8(a)(1) of the Act does not turn on the employer’s motive or on whether the coercion succeeded or failed. The test is whether the employer engaged in conduct which, it may reasonably be said, tends to interfere with the free exercise of employee rights under the Act.

American Freightways Co., 124 NLRB 146, 147, 44 LRRM 1302 (1959). See, e.g.,

Correctional Med. Servs. Inc., 356 NLRB No. 48, 189 LRRM 1454 (2010).

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Freedom of Speech and Section 8(a)(1)

Section 8(a)(1) violations frequently are asserted in the context of verbal conduct

by an employer. The starting point of any analysis of verbal conduct begins with Section

8(c) of the Act which provides:

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any provision of this Act, if such expression contains no threat of reprisal or force or promise of benefit.

29 U.S.C. § 158(c).

The requirements of Section 8(c) “merely implements the First Amendment.”

NLRB v. Gissel Packing Co., 395 U.S. 575 (1969). However, in Gissel, the Supreme

Court made it clear that:

[a]ny assessment of the precise scope of employer expression, of course, must be made in the context of its labor relations setting. Thus, an employer’s rights cannot outweigh the equal rights of the employees to associate freely, as those rights are embodied in § 7 and protected by § 8(a)(1) and the proviso to § 8(c).

NLRB v. Gissel Packing Co., supra at 617.

Thus, the Board frequently is called upon to balance an employer’s rights to free

speech and the rights contained in Section 7.

Employer Work Rule or Policy

An employer violates Section 8(a)(1) by having a work rule if that “would

reasonably tend to chill employees in the exercise of their Section 7 rights.” Lafayette

Park Hotel, 326 NLRB 824, 825 (1998), enfd. 203 F.3d 52 (D.C. Cir. 1999). If the work

rule in question does not explicitly restrict protected concerted activity, the Board will

find a violation of Section 8(a)(1) if:

(1) employees would reasonably construe the language to prohibit Section 7 activity;

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(2) the rule was created in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights. Lutheran Heritage Village-Livonia, 343 NLRB 646, 647 (2004). Rules that are

ambiguous about whether they apply to Section 7 activity, and do not contain limiting

language or context that makes clear to employees that the rule does not restrict protected

concerted activity, will be deemed unlawful. University Medical Center, 335 NLRB

1318, 1320-22 (2001), enf. denied in pertinent part, 335 F.3d 1079 (D.C. Cir. 2003). On

the other hand, rules that clarify and restrict their scope by including examples of illegal

or unprotected conduct so that employees understand the rules do not apply to protected

concerted activity, will not be found unlawful. Tradesmen International, 338 NLRB 460,

460-62 (2002).

Handbooks Provisions and Rules

On March 18, 2015, the NLRB’s General Counsel issued an update on cases

involving employer handbooks and rules, which in his opinion raised significant legal or

policy issues. 8/ See Memorandum GC 15-04. The General Counsel noted that under

Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), the mere maintenance of a

work rule may violate § 8(a)(1) of the Act if the rule has a chilling effect on employee’s

Section 7 activity. Moreover, even well intentioned rules that would inhibit employees

from engaging in protected activities under the Act are prohibited.

8/ The NLRB’s General Counsel acts as the prosecutorial arm of the agency.

His interpretations establish the guidelines for the review and prosecution of unfair labor practices, but are not binding on the Board or the administrative law judges hearing a case.

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In GC15-04, rules on various issues were compared and the language found

unlawful and/or lawful was compared and explained. 9/ Because the precise language

used in the rule is important, the following chart provides the language as contained in

GC 15-04 and a brief description of the General Counsel’s rationale.

A. Confidentiality Rules

• Employees have a § 7 right to discuss wages, hours and terms and conditions of employment with fellow employees and non-employees, such as union representatives.

• Broad prohibitions on disclosing “confidential” information are lawful if they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment, because employers have a substantial and legitimate interest in maintaining the privacy of certain business information.

• An otherwise unlawful confidentiality rule will be lawful if when viewed in context, employees would not reasonably understand the rule to prohibit § 7 protected activity.

Unlawful

Reason

• Do not discuss “customer or employee information” outside of work including “phone numbers [and] addresses.”

Overbroad reference to “employee information”

• “You must not disclose proprietary or confidential information about [the Employer, or] other associates (if the proprietary or confidential information relating to [the Employer’s] associates was obtained in violation of law or lawful Company policy).

Overbroad because reasonable employee would not know how employer determines “unlawful Company policy.”

9/ In the second part of the Memorandum, the General Counsel provides

language from a Settlement Agreement with Wendy’s International LLC on various lawful handbook provisions. A review of the provisions set forth in this section of GC 15-04 is not included in this outline.

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• “Never publish or discuss [the Employer’s] or another’s confidential or other proprietary information. Never publish or report on conversations that are meant to be private or internal to [the Employer].”

May ban disclosure of Employer’s own information, but broad reference to “another’s” information without clarification would reasonably be interpreted to include other employees’ wages and other terms and conditions of employment.

• Prohibiting employees from “[d]isclosing…details about the [Employer].”

• “Sharing of [overheard conversations at the work site] with your coworkers, the public or anyone outside of your immediate work group is strictly prohibited.”

• “Discuss work matters only with other [Employer] employees who have a specific business reason to know or have access to such information….do not discuss work matters in public places.”

• “[I]f something is not public information, you must not share it.”

Facially unlawful, even though no explicit reference terms and conditions of employment or employee information, because rules contained broad restrictions and did not clarify, in express language or contextually, that they did not restrict Section 7 communications. Ban on nonpublic information could encompass employee wages, benefits and other terms and conditions of employment.

• Confidential Information is: “All information in which its [sic] loss, undue use or unauthorized disclosure could adversely affect the [Employer’s] interests, image and reputation or compromise personal and private information of its members.”

This rule could lead employees to believe that they cannot disclose information in support of their complaints about wages and working conditions because it might adversely affect the employer’s interest, image or reputation.

Lawful Reason

• No unauthorized disclosure of

“business ‘secrets’ or other confidential information.”

• “Misuse or unauthorized disclosure of confidential information not otherwise available to persons or

1) does not reference information regarding employees or employee terms and conditions of employment; 2) although uses general term “confidential,” they do not define it in an overbroad manner, and 3) does not otherwise contain

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firms outside [Employer] is cause for disciplinary action, including termination.’

• “Do not disclose confidential financial data, or other non-public proprietary company information. Do not share confidential information regarding business partners, vendors or customers.”

language that would reasonably be construed to prohibit § 7 communications.

In appropriate context where employee could not reasonably understand the rule to prohibit § 7 activity:

• Prohibition on disclosure of all “information acquired in the course of one’s work.”

Read in isolation would be unlawful. However, in this case nested in midst of rule related to conflicts of interest and compliance with SEC regulations and state and federal laws. Reasonable interpretation would lead to understanding that the information was customer credit cards, contracts and trade secrets and not § 7 activity.

B. Employee Conduct Toward the Company and Supervisors

• Employees have a § 7 right to criticize or protest Employer’s labor policies or treatment of employees.

• Without clarification, rules that prohibit “disrespectful,” “negative,” “inappropriate,” or “rude” conduct towards the employer or management absent sufficient clarification or context will usually be found unlawful.

• Criticism does not lose the Act’s protection because the criticism is false or defamatory – so a rule that prohibits false statements will be unlawfully overbroad unless it specifies only that maliciously false statements are prohibited.

• Rule that requires that employees act” professionally” and “courteously” in their dealings with coworkers, clients, employer business partners, competitors or other third parties but not the employer and management will generally be found lawful.

• Rules that prohibit conduct that amounts to insubordination would also not be construed as limiting protected activity.

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Unlawful Reason

• “[B]e respectful to the company, other employees, customers, partners, and competitors.”

• Do “not make fun of, denigrate, or defame your co-workers, customers, franchisees, suppliers, the Company, or our competitors..”

• “Be respectful of others and the Company.”

• No “[d]efamatory, libelous, slanderous or discriminatory comments about [the Company], its customers and/or competitors, its employees or management.

Unlawfully overbroad since employees would reasonably construe them to ban protected criticism or protests regarding their supervisors, management or the employer in general.

• “Disrespectful conduct or insubordination, including, but not limited to, refusing to follow orders from a supervisor or a designated representative.”

• “Chronic resistance to proper work-related orders or discipline, even though not overt insubordination” will result in discipline.’

Unlawful because bans conduct that does not rise to the level of insubordination, which reasonably would be understood as including protected concerted activity.

• “Refrain from any action that would harm persons or property or cause damage to the Company’s business or reputation.”

• “[I]t is important that employees practice caution and discretion when posting content [on social media] that could affect [the Employer’s] business operation or reputation.”

• Do not make “[s]tatements that damage the company or this company’s reputation or that disrupt or damage the company’s business relationships.”

• “Never engage in behavior that

• Right to criticize includes the right to do so in public forum so rules unlawfully overbroad because they reasonably would be read to require employees to refrain from criticizing the employer in public. See Quicken Loans, Inc., 361 NLRB No. 94, slip op at 1 n. 1 (Nov. 3, 2014).

• GC recognizes that Act does not protect employee conduct aimed at disparaging an employer’s product, as opposed to conduct critical of an employer’s labor

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would undermine the reputation of [the Employer], your peers or yourself.”

policies or working conditions. • Rules have insufficient context

or examples to indicate that they are aimed only at unprotected conduct.

Lawful Reason

• No “rudeness or unprofessional

behavior toward a customer, or anyone in contact with” the company.

• “Employees will not be discourteous or disrespectful to a customer or any member of the public while in the course and scope of [company] business.”

• No mention of company or its management.

• “Each employee is expected to work in a cooperative manner with management/supervision, coworkers, customers and vendors.”

• Usually rules to cooperate do not implicate § 7. See Cooper River of Boiling Springs, LLC, 360 NLRB No. 60, slip op at 1 (February 28, 2014).

• “Each employee is expected to abide by Company policies and to cooperate fully in any investigation that the Company may undertake.”

• Read in context would reasonably interpret it to apply to employer investigations of workplace misconduct rather than investigations of unfair labor practices or arbitration.

• “Being insubordinate, threatening, intimidating, disrespectful or assaulting a manager/supervisor, coworker, customer or vendor will result in” discipline.

• Board has said that it does not read rules in isolation. Even when phrases and words reasonably would be interpreted to ban criticism of employer, if the context makes plain only serious misconduct is banned, the rule will be lawful. See Tradesmen International, 338 NLRB 460, 460-462 (2002).

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C. Conduct Towards Fellow Employees

• Employees have a right to argue and debate with each other about unions, management, and their terms and conditions of employment.

• These discussions can become contentious, but protected concerted speech will not lose its protection even if it includes “intemperate, abusive, and inaccurate statements.” Linn v. United Plant Guards, 383 U.S. 53 (1966).

• When employer bans “negative” or “inappropriate” discussions among the employees without clarification, employees reasonably will read to prohibit discussion and interactions that are protected. See Triple Play Sports Bar & Grille, 361 NLRB No. 31, slip op. at 7 (Aug. 22, 2014); Hills & Dales General Hospital, 360 NLRB No. 70, slip op. 1 (Apr. 1, 2014).

• E.g. employers have a legitimate and substantial interest in harassment free environment, but may not be so broad to prohibit vigorous debate or intemperate comments regarding § 7 protected subjects.

Unlawful Reason

• “[D]on’t pick fights” online. Overbroad and could reasonably construe to restrict protected discussions with co-workers about unionization, employer’s labor policies or the employer’s treatment of employees

• Do not make “insulting, embarrassing, hurtful or abusive comments about other company employees online,” and “avoid the use of offensive, derogatory, or prejudicial comments.”

Discussions about unionization and other protected activity are often contentious and controversial and could be covered by the rule. Terms could be reasonably construed to limit protected criticism of supervisors and managers since they are “company employees.”

• “[S]how proper consideration for others’ privacy and for topics that may be considered objectionable or inflammatory, such as politics and religion.”

• § 7 protects communications about political matters, e.g. proposed right to work legislation.

• Need to clarify context or give examples to avoid covering § 7 activities.

• Discussion of unionism would be chilled by such a rule because it can be an inflammatory topic similar to politics and religion.

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• Do not send “unwanted, offensive,

or inappropriate” e-mails.

Vague and overbroad. In absence of context or examples to clarify that it does not encompass § 7 communications.

• “Material that is fraudulent, harassing, embarrassing, sexually explicit, profane, obscene, intimidating, defamatory, or otherwise unlawful or inappropriate may not be sent by e-mail.”

Several of the terms were ambiguous and could include § 7 activity.

Lawful Reason

• “Making inappropriate gestures, including visual staring.”

• Any logos or graphics worn by employees “must not reflect any form of violent, discriminatory, abusive, offensive, demeaning, or otherwise unprofessional message.”

• “[T]hreatening, intimidating, coercing, or otherwise interfering with the job performance of fellow employees or visitors.”

• No “harassment of employees, patients or facility visitors.”

• No “use of racial slurs, derogatory comments, or insults.”

• Derogatory or insults could include § 7, but not statements where in section involving discrimination and harassment.

D. Employee Interaction with Third Parties

• Under § 7, employees have a right to communicate with the news media,

government agencies and other third parties about wages, benefits and other terms and conditions of employment. See Trump Marina Associates, 354 NLRB 1027, 1027 n. 2 (2009), incorporated by reference 355 NLRB 585 (2010), enforced mem., 435 F. App’x 1 (D.C. cir. 2014).

• Most frequent offenders are Company media policies. • Must be careful to ensure that rules do not reasonably ban employees from

speaking to media or other third parties on their own (or other employees’) behalf.

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Unlawful Reason

• Employees are not “authorized to speak to any representatives of the print and/or electronic media about company matters” unless designated to do so by HR, and must refer all media inquiries to the company media hotline.

Phrase “company matters” encompass employment concerns. No limiting language to clarify that the rule applied only to those speaking as official company representatives.

• “[A]ssociates are not authorized to answer questions from the news media…..When approached for information, you should refer the person to [the Employer’s] Media Relations Department.”

• “[A]ll inquiries from the media must be referred to the Director of Operations in the corporate office, no exceptions.”

Blanket restrictions could reasonably be understood to apply to all media contacts, not just inquiries seeking the employer’s official positions.

• “If you are contacted by any government agency you should contact the Law Department immediately for assistance.”

Limits communication with government agency.

Lawful Reason

• “The company strives to anticipate

and manage crisis situations in order to reduce disruption to our employees and to maintain our reputation as a high quality company. To best serve these objectives, the company will respond to the news media in a timely and professional manner only through the designated spokesperson.”

No blanket prohibition against all contact.

• “Events may occur at our stores that will draw immediate attention from the news media. It is imperative that one person speaks

Prefatory language would cause employees to reasonably construe the rule as an attempt to control Company message rather than restrict § 7 rights.

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for the Company to deliver an appropriate message and to avoid giving misinformation to any media inquiry. While reporters frequently shop as customers and may ask questions about a matter, good reporters identify themselves prior to asking questions. Every…employee is expected to adhere to the following media policy:….2. Answer all media/reporter questions like this: “I am not authorized to comment for [the Employer] (or I don’t have the information you want). Let me have our public affairs office contact you.”

Could not reasonably be construed to restrict § 7 activity.

E. Rules Restricting Use of Company Logos, Copyrights, and Trademarks

• Rules cannot prohibit employees’ fair use of that property. See Pepsi-Cola Bottling Co., 301 NLRB 1008, 1019-20 (1991), enforced mem., 953 F.2d 638 (4th Cir. 1992).

• May use logo and name on picket signs, leaflets, other protected material. • Employer rights are not implicated with the non-commercial use of a name,

logo or other trademark to identify the employer in the course of § 7 activity. • Broad ban will generally be found unlawfully overbroad.

Unlawful Reason

• Do “not use any Company logos, trademarks, graphics, or advertising materials” in social media.

• Do not use “other people’s property,” such as trademarks, without permission in social media.

• “Use of [the Employer’s] name, address or other information in your personal profile [is banned] … In addition, it is prohibited to use [the Employer’s] logos, trademarks or any other copyrighted material.”

Broad restrictions that employees could reasonably read to ban fair use of employer’s intellectual property in the course of § 7 activities are overbroad and may chill employee rights.

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• “Company logos and trademarks may not be used without written consent….”

Lawful Reason

• “Respect all copyright and other

intellectual property laws. For [the Employer’s] protection as well as your own, it is critical that you show proper respect for the laws governing copyright, fair use of copyrighted material owned by others, trademarks and other intellectual property, including [the Employer’s] own copyrights, trademarks and brands.

• “DO respect the laws regarding copyrights, trademarks, right of publicity and other third-party rights. To minimize the risk of a copyright violation, you should provide references to the source(s) of information you use and accurately cite copyrighted works you identify in your online communications. Do not infringe on [Employer’s] logos, brand names, taglines, slogans, or other trademarks.”

These rules simply require respect for laws protecting trademark or copyrighted material and permit fair use.

F. Rules Restricting Photography and Recordings

• § 7 right to photograph and make recordings in furtherance of protected concerted activities including the right to use personal devices to take such pictures and recording. See Hawaii Tribune Herald, 356 NLRB No. 63, slip op at 1 (Feb. 14, 2011), enforced sub nom, Stephens Media, LLC v. NLRB, 677 F.3d 1241 (D.C. Cir. 2012); White Oak Manor, 353 NLRB 795, 795 (2009), incorporated by reference, 355 NLRB 1280 (2010), enforced mem., 452 F App’x 374 (4th Cir. 2011).

• Total bans of photography or recordings or banning use or possession of personal cameras or recording devices are unlawfully overbroad where they

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would reasonably be read to prohibit taking of pictures or recordings on non-work time.

Unlawful Reason

• “Taking unauthorized pictures or video on company property” is prohibited.

Prohibits all unauthorized use of camera or video recorder including attempts to document health and safety violations and other protected concerted activity.

• “No employee shall use any recording device including but not limited to, audio, video, or digital for the purpose of recording any [Employer] employee or [Employer] operation….”

Unlawful because employees could reasonably construe to preclude among other things documentation of unfair labor practices.

• A total ban on use or possession of personal electronic equipment on employer property.

• A prohibition on personal computers or data storage devices on employer property.

Blanket restriction is a violation.

• Prohibition from wearing cell phones, making personal calls or viewing or sending texts “while on duty.”

Employees could reasonably understand “on duty” to include breaks and meal period as opposed to actual work time.

Lawful

• If scope appropriately limited. E.g. breach of patient privacy rule and no-photography. See Flagstaff Medical Center, 357 NLRB No. 65, slip op at 5 (August 26, 2911(, enforced in relevant part, 715 F.3d 928 (D.C. Cir. 2013).

Reason

• No cameras are to be allowed in the store or parking lot without prior approval from the corporate office.

Embedded in lawful media policy and followed instructions on how to deal with reporters in the store.

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G. Rules Restricting Employees from Leaving Work

• One of the most fundamental § 7 rights is the right to strike. • Rules that regulate when employees can leave work are unlawful if employees

reasonably could read them to forbid protected strike actions and walkouts. See Purple Communications, Inc., 361 NLRB No. 43, slip op at 2 (September 24, 2014).

• If no mention of “strikes,” “walkouts,” “disruptions,” or the like, then employees will reasonably understand the rule to pertain to activity unrelated to protected concerted activity.

Unlawful Reason

• “Failure to report to your scheduled shift for more than three consecutive days without prior authorization or ‘walking off the job’ during a scheduled shift” is prohibited

• “Walking off the job…” is prohibited

Broad prohibitions about walking off the job.

Lawful Reason

• “Entering or leaving Company

property without permission may result in discharge.”

• No reference to “work stoppage” or “walking off the job”

• Prohibition against leaving work place during work time without permission will not be reasonably encompass strikes.

• However, portion of rule requiring employees to obtain permission before entering the property UNLAWFUL because employers may not deny off-duty employees access to parking lots, gates and other outside nonworking areas except where sufficiently justified by business reasons or pursuant to a narrowly tailored policy. Tri-County Medical Center, 222 NLRB 1089 (1976).

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• “Walking off shift, failing to report for a scheduled shift and leaving early without supervisor permission are also grounds for immediate termination.”

Rule lawful in context of health care responsibilities. See Wilshire at Lakewood, 343 NLRB 141, 144 (2004), vacated in part, 345 NLRB 1050 (2005) enforcement denied on other grounds, Jochims v. NLRB, 480 F3d 1161 (D.C. Cir. 2007).

H. Conflict of Interest Rules

• § 7 protects employee’s rights even if activity is in conflict with the employer’s interests.

• Employees may protest in front of company, organize a boycott, and solicit support for a union while on non-work time. See HTH Corp., 356 NLRB No. 182, slip op at 2, 25 (June 14, 2011), enforced 693 F.3d 1051 (9th Cir. 2012).

• If rule could be interpreted to prohibit such activity, then unlawful. • But if examples or clarifications, then limited to legitimate business interests

and understand prohibition only to unprotected activity. See Tradesmen International, 338 NLRB 460, 461-462 (2002).

Unlawful Reason

• Employees may not engage in “any action” that is “not in the best interest of [the Employer].”

Overbroad

Lawful Reason

• Do not “give, offer or promise,

directly or indirectly, anything of value to any representative of an Outside business,” where “Outside Business” is defined as “any person, firm, corporation, or government agency that sells or provides a service to, purchases from, or competes with [the Employer].” Examples of violations include “holding an ownership or financial interest in an Outside Business” and “accepting gifts, money, or services from an

Included context and examples that indicated that the rules were not meant to encompass protected concerted activity.

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Outside Business.” • As an employee, “I will not engage

in any activity that might create a conflict of interest for me or the company,” where the conflict of interest police devoted 2 pages to examples such as “avoid outside employment with a[n employer] customer, supplier or competitor, or having a significant financial interest with one of these entities.

• Employee must refrain “from any activity or having any financial interest that is inconsistent with the Company’s best interest” and also must refrain from “activities, investments or associations that compete with the Company, interferes with one’s judgement concerning the Company’s best interests, or exploit one’s position with the Company for personal gains.”

Lawful based on contextual analysis. Rule was in a section of the handbook that deals with business ethics and includes requirements to act with “honesty, fairness, and integrity”; comply with “all laws, rules and regulations”; and provide “accurate, complete, fair, timely and understandable” information in SEC filings.

Some Recent NLRB Cases on Unlawful Policies and Handbook Rules

It is not surprising that the NLRB has begun to rule on cases raising the issues

addressed by the General Counsel. The following is a brief listing of some of those

cases:

• Prohibition of disclosure of “employee information maintained in confidential personnel files.” Lily Transp. Corp. & Robert Suchar, 362 NLRB No. 54 (March 30, 2015).

• Prohibitions on discussing “job details” outside the company, commenting to the media, or posting non-public company information on the internet. DIRECTV U.S. Holdings, LLC, 362 NLRB No. 48 (March 31, 2015).

• Requiring employees to identify themselves when posting comments about the employer, employer’s business or a policy issue and by prohibiting employees

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from using employer’s logos in any manner. Boch Imports, Inc., 362 NLRB No. 83 (April 30, 2015).

• Rules (1) confining employees to their job assignment areas; (2) prohibiting the distribution of literature in guest/work areas, solicitation during working time, or solicitation of guests at any time for any purpose; (3) prohibiting employees from having a “conflict of interest with the employer; and (4) prohibiting behavior that violates “common decency” or morality or that publicly embarrasses the employer. The Sheraton Anchorage, 362 NLRB No. 123 (June 18, 2015).

• “Organizational Ethics Policy” that prohibited disclosure of “employee or corporate information.” Columbia Memorial Hospital, 362 NLRB No. 154 (July 30, 2015).

• Handbook rules that (1) prohibited employees from disclosing non-public information about the employer to anyone outside the company; (2) prohibited employees from taking unauthorized photos or video recordings on the premises; and (3) stated that employees who walk off the job during a shift will be deemed to have abandoned their job and voluntarily separated from employment. Rio All-Suites Hotel & Casino, 362 NLRB No. 190 (August 27, 2015)

Rules Regarding Employee Use of Social Media

Against this backdrop regarding protected concerted activity, the Board has faced

a variety of cases involving employer rules that restrict employees’ use of social media.

In many of these cases, the Board has found the rules are overbroad and unlawful because

they restrict employees’ Section 7 rights.

In May 2012, the NLRB’s Acting General Counsel issued an Advice

Memorandum concerning recent social media cases. See OM 12-59. The following

employer policy provisions were alleged to be unlawful:

(1) A nationwide retailer’s handbook statement on “Information Security” that provided:

If you enjoy blogging or using online social networking sites such as Facebook and YouTube (otherwise known as Consumer Generated Media or CGM) please note that there are guidelines to follow if you plan to mention [the Employer] or your employment with [the Emploeyr] in these online vehicles ...

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Don’t release confidential guest, team member or company information….

This provision was unlawful because it could reasonably be interpreted as

prohibiting employees from discussing and disclosing information regarding their

employment, which was clearly protected activity.

(2) Instructing employees to make sure their personal internet posts were “completely accurate and not misleading and that they do not reveal non-public information on any public site.”

This rule was overbroad because it could reasonably be interpreted to apply to

discussions about and criticism of the employer’s labor policies and treatment of

employees.

(3) Instructing employees not to post “offensive, demeaning, abusive or inappropriate remarks,” and stating that “communications with coworkers ... that would be inappropriate in the workplace are also inappropriate online.”

This rule was overbroad because it covered a spectrum of communications that

would include criticism of the Employer’s labor policies and treatment of employees. In

addition, it did not specify which communications the Employer would find inappropriate

at work, making it ambiguous about the rule’s application to protected concerted activity.

(4) Directing employees not to comment on “legal matters, including pending litigation and disputes.”

(5) Instructing employees to “[a]dopt a friendly tone when engaging online.

Don’t pick fights.” (6) Encouraging employees to “resolve concerns about work by speaking with

coworkers, supervisors, or managers” rather than resorting to “social media or other online forums” to resolve concerns.

Notably, many of these policies included “savings clauses,” statements that these

policies would be administered consistently with the requirements of the National Labor

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Relations Act. These savings clauses generally are not sufficient to cure overbroad

policies that restrict Section 7 rights.

On the other hand, some employer policies were acceptable:

(1) An Employer’s policy stating that “harassment, bullying, discrimination, or retaliation that would not be permissible in the workplace is not permissible between coworkers online, even if it is done after hours from home and on home computers.”

This provision would not reasonably be construed to apply to Section 7 activity

because the rule contained a list of “plainly egregious conduct, such as bullying and

discrimination.”

(2) An Employer’s policy providing: “No unauthorized postings: Users may not post anything on the Internet in the name of [Employer] or in a manner that could reasonably be attributed to [Employer] without prior written authorization from the President or the President’s dedicated agent.”

(3) An Employer’s policy providing: “Respect all copyright and other

intellectual property laws ... [I]t is critical that you show proper respect for the laws governing copyright, fair use of copyrighted material owned by others, trademarks, and other intellectual property, including [Employer’s] own copyrights, trademarks and brands.”

One of the policies reviewed and found unlawful by the Board was from Wal-

Mart. In response to the Board’s findings, Wal-Mart revised its social media policy. The

Board reviewed the revised policy and found that Wal-Mart had remedied the problems

with the earlier policy. For instance, the Board stated that the revised policy provided

sufficient examples of prohibited conduct to avoid ambiguity so that employees would

understand that it did not cover activities protected by Section 7. A copy of Wal-Mart’s

revised policy approved by the Board can be obtained at GC Memorandum OM 12-59 at

22-24 (May 30, 2012).

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Other NLRB Cases of Importance

A. Confidentiality of Employer Investigations In Banner Estrella Medical Center, 362 NLRB No. 137 (June 26, 2015), the

NLRB reaffirmed an earlier decision, 358 NLRB No. 93 (July 30, 2012), which had been

invalidated under the United States Supreme Court decision in NLRB v. Noel Canning,

573 U.S. ____, 134 S. Ct. 2440 (2014). In its reaffirmed decision, the Board held that the

employer’s instruction (contained in a pre-printed complaint form provided by HR to

employees) “had a reasonable tendency to coerce employees, and so constituted an

unlawful restraint on Section 7 rights.” In order to justify a restriction on discussion of

disciplinary investigations, the employer must have a “legitimate and substantial business

justification” such as (1) the need to protect witnesses, (2) possible spoliation of

evidence, (3) testimony is in danger of being fabricated, or (4) need to prevent a cover-

up. The Board made clear that a “generalized concern” did not satisfy the requirement

for an “objectively reasonable basis” for requiring confidentiality of a “particular

investigation.” See also Boeing Company, 362 NLRB No. 195 (8/27/2015) (Following

Banner Estrella Medical Center, 362 NLRB No.137 (2015)), the Board ruled that a

company human resources policy directing or recommending employees to keep all

information about an investigations confidential (except to company personnel or union

representatives) violates Section 8(a)(1) in that it infringes on employees’ statutory rights

to discuss among themselves their terms and conditions of employment, although such

confidentiality requests could be lawful in particular matters when necessary to protect

witnesses, to avoid evidence destruction or testimony fabrication, or to prevent a cover

up).

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B. Confirmation of At-Will Status In American Red Cross Arizona Blood Services Region, Case No. 28-CA-23443

(February 1, 2012), an administrative law judge held that the following language in an

employer’s handbook receipt to be signed by employees receiving the handbook, was a

violation of the NLRA: “I further agree that the at-will employment relationship cannot

be amended, modified or altered in any way.” The judge concluded that this language

did not inform employees that a collective bargaining agreement could change the at-will

relationship and, therefore, such language could chill employees’ exercise of Section 7

activities. This case was settled after the judge’s decision.

Similarly, in Hyatt Hotels Corporation, Case No. 28-CA-06114, a regional

director issued a complaint against the hotel for statements contained in an employee

acknowledgement form that affirmed the at-will relationship and stated that the sole

exception to the at-will relationship was an agreement in writing signed by the employee

and the Executive Vice President/Chief Operating Officer or the President. Like the

American Red Cross case, this matter was settled by the hotel after the complaint was

issued.

On October 31, 2013, the General Counsel clarified in two memos that clauses

that do not cause employees to waive their ability to unionize and alter their employment

status are permissible so long as they make clear that the at-will relationship can be

altered. In February 2014, the General Counsel issued a memorandum that identified at-

will provisions in employee handbooks as an area for centralized oversight by the

General Counsel’s office to the extent that prior Board precedent or Advice Memoranda

do not definitively resolve the legal issue being faced.

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C. A Union Representative May Accompany an OSHA Inspection Even When the Union Has Not Been Elected To Represent Employees in the Workplace

The Occupational Safety and Health Act allows employees to select an employee

representative to participate during a “walkaround” portion of an OSHA inspection. In a

recent Letter of Interpretation, OSHA’s then Deputy Assistant Secretary Richard Fairfax

stated that employees in a non-unionized workplace can select a union organizer or

“community representative” who is not an employee to be the employees’ representative

during such a walkaround. See

www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=

INTERPRETATIONS&p_id=28604. This interpretation potentially provides unions

with new access to non-unionized employers’ facilities.

D. Purple Communication, Inc., 361 NLRB No. 126 (2014) In Purple Communication, Inc., 361 NLRB No. 126 (2014), the Board found a

violation in the employer’s electronic communication policy prohibiting employees from,

among other things, using the employer’s e-mail system to engage in “activities on behalf

of organizations or person with no professional or business affiliation with the Company”

or sending “uninvited email of a personal nature.” The NLRB adopted “a presumption

that employees who have been given access to the employer’s email system in the course

of their work are entitled to use the system to engage in statutorily protected discussions

about their terms and conditions of employment while on nonworking time, absent a

showing by the employer of special circumstances that justify specific restrictions.” The

Board found that email was “a natural gathering place’ pervasively used for employee-to-

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employee conversations.” The employer has the burden of rebutting the presumption by

showing that “special circumstances necessary to maintain product ion or discipline

justify restricting employees’ rights.”

The following limitations were identified: (1) the presumption applies only to

employees who have already been given access to the employer’s email; (2) an employer

is not required to provide email access to employees who do not otherwise already have

such access; (3) employers are not required to grant non-employees access to its email

system; and (4) although viewed by the NLRB to be a rare situation, an employer may

justify a total ban on non-work use of email, including use for § 7 activity if the employer

can demonstrate special circumstances that make the ban necessary to maintain

production or discipline. Also, an employer may apply uniform and consistently

enforced controls over email to the extent necessary to maintain production or discipline

or to prevent interference with the email system’s efficient functioning.

The decision does not prevent employers from monitoring computers and email

systems for “legitimate management reasons, such as ensuring productivity and

preventing email use for purposes of harassment or other activities that could give rise to

employer liability.” It also does not address access to any other type of electronic

communication systems.

E. Certain Arbitration Agreements Violate NLRA In January 2012, the Board ruled that an employer violated the NLRA by

requiring employees to agree to mandatory arbitration of employment disputes and to

forego class and collective action as a condition of their employment. D.R. Horton, Inc.,

357 NLRB No. 184 (2012). The Board held that such an agreement violated employees’

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rights to engage in concerted activity pursuant to Section 7. The Fifth Circuit Court of

Appeals disagreed with the Board’s conclusion in a decision issued in December 2013,

concluding that the Board’s decision violated the Federal Arbitration Act. D.R. Horton,

Inc. v. National Labor Relations Board, 737 F.3d 344 (5th Cir. 2013). Recently, the Fifth

Circuit Court of Appeals reaffirmed its holding in D.R. Horton, Inc. by holding in another

case that an employer did not commit an unfair labor practice by requiring employees to

sign arbitration agreements, as long as these agreements did not explicitly prohibit an

employee from filing an unfair labor charge with the Board. Murphy Oil USA, Inc. v.

National Labor Relations Board, ____F.3d____, 2015WL6457613, 204 LRRM (BNA)

3489 (5th Cir. 2015) A number of courts have considered similar questions and have

declined to follow the Board’s reasoning in D.R. Horton. See, e.g., Richards v. Ernst &

Young LLP, 734 F.3d 871 (9th Cir. 2013); Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th

Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2nd Cir. 2013).

Despite the growing court authority against its position, the NLRB recently found

again that an arbitration agreement that includes class action waivers violates the Act,

even when this agreement explicitly allows employees to file unfair labor practices with

the Board. Amex Card Services Co., 363 NLRB No. 40 (November 10, 2015).

F. Attorney Disclosure Requirements

The Labor-Management Reporting and Disclosure Act (LMRDA) requires,

among other things, that employers report to the US Department of Labor whenever they

hire consultants or contractor (including attorneys) to persuade their employees on union

issues. However, LMRDA section 203(c) excludes from such reporting the employer

hiring consultants, contractors or attorneys to provide oral or written “advice” to the

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employer. Traditionally the DOL had interpreted this exception to apply so long as the

advisor did not meet with any employees that were the subject of the persuasion. In June

2011, the DOL proposed to narrow this “advice exception” to LMRDA’s reporting

requirements by having it apply only to advice on what employers lawfully can say to

employees, on compliance obligations, and on general guidance on NLRB precedent or

practice. In addition, the DOL proposal would require employers to report having an

advisor, including an attorney, draft or revise any persuasive documents – such as speech

scripts, letters, website content, and other communications. This DOL proposal received

nearly 6,000 comments, including negative comments in 2011 from the US Chamber of

Commerce, the American Bar Association, and other business groups. Earlier this year,

the DOL announced that it would release its final rule in this area (which had been

previously delayed). This final rule release date has been extended several times, and is

currently March of 2016. If the DOL’s final rule is similar to the proposed rule, it is very

likely that it will be challenged in court for, among other things, violating the attorney-

client privilege.