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NLRB Changes Course And Issues New Common Sense Guidance For Employer Handbook Rules

Published on: July 27, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Most employers are aware that employee handbook rules that impede employees’ abilities to engage in protected concerted activity – e.g., organizing unions, discussing wages, discipline or other terms and conditions of employment – run afoul of rights guaranteed by Section 7 of the National Labor Relations Act (NLRA). Under the prior administration the National Labor Relations Board (NLRB) took a very narrow view, finding that facially-neutral policies that could conceivably be construed to chill Section 7 rights are unlawful. As a result, employers were in peril of having the most innocuous workplace rules aimed at advancing basic employer interests, such as workplace civility, subject to challenge. Thankfully, the newly-constituted Board overruled years of precedent in favor of a much more reasonable and employer-friendly approach to assess the legality of employee handbook rules.

In December 2017, the Board issued its ground-breaking decision in The Boeing Co., 365 NLRB No. 154, announcing a new three category test that balances the employer’s interests in maintaining discipline and productivity and protecting its property, against employee rights to engage in concerted activities protected by the NLRA. On June 6, 2018, General Counsel of the NLRB issued a memorandum entitled “Guidance on Handbook Rules Post-Boeing” that serves as a useful roadmap for how the Board will apply its new three-category standard to a wide array of workplace rules commonly found in employee handbooks and other policies. The Guidance makes is clear that that the mere possibility that a workplace rule could be interpreted to preclude Section 7 activity is no longer a justification for finding the rule unlawful, and that “ambiguities in rules are no longer to be interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included.”

The New Three-Category Test: When assessing the legality of workplace rules, the NLRB will now assign workplace rules to one of the following three categories:

Category 1: Rules that are Generally Lawful to Maintain. Rules in this category are generally lawful because when reasonably interpreted, they do not prohibit or interfere with employees’ exercise of NLRA rights, or because the potential adverse impact on those rights is outweighed by the employer’s legitimate business justification of the rule. The Guidance identified the following types of rules as falling into this category:

Civility rules (those requiring employees act civilly and refrain from disparaging clients, coworkers and others conducting business with the employer)
No-photography and no-recording rules (those requiring employees to secure prior approval from management before taking photographs in the workplace or recording workplace conversations)
Rules against insubordination, non-cooperation, or on-the-job conduct that adversely affects operations
Disruptive behavior rules
Rules protecting the confidential, proprietary, and customer information or documents
Rules against defamation and misrepresentation
Rules against using employer logos or intellectual property
Rules requiring authorization to speak for the company
Rules banning disloyalty, nepotism, or self-enrichment

Absent unlawful application of the foregoing rules, the Board will generally deem these rules lawful.

Category 2: Rules Warranting Individualized Scrutiny. Rules in this category are not obviously lawful or unlawful, and thus must be evaluated on a case-by-case basis to determine whether the rule would interfere with NLRA rights, and if so, whether any adverse impact upon these protected rights is outweighed by the employer’s legitimate justifications. The Guidance identifies the following “possible examples” of those rules requiring individualized scrutiny:

Broad conflict-of-interest rules that do not specifically target fraud and self-enrichment
Confidentiality rules that broadly encompass “employer business” or “employee information” (as opposed to lawful rules regarding customer or proprietary employer information, or unlawful rules that restrict employees from discussing wages and terms and conditions of employment )
Rules regarding disparagement or criticisms of the employer (as opposed to lawful civility rules regarding the disparagement of employees)
Rules regarding the use of the employer’s name (as opposed to lawful rules restricting use of the employer’s logo or trademark)
Rules generally restricting the ability of employees to speak to the media or third parties (as opposed to lawful rules restricting the ability of employees to speak to the media or third parties on the employer’s behalf)
Rules banning off-duty conduct that might harm the employer (as opposed to lawful rules banning insubordinate or disruptive work conduct, or unlawful rules specifically banning participation in outside organizations )
Rules against making false or inaccurate statements (as opposed to lawful rules against making defamatory statements)

If a category 2 rule is challenged, the Board will consider any factors raised by the parties or identified by Region that weigh in favor of either the rule’s negative impact on protected NLRA activity or the employer’s legitimate business interest furthered by the rule.

Category 3: Rules that are Unlawful to Maintain. Rules in this category are generally unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights outweighs any justifications associated with the rule. Examples of these rules include:

Confidentiality rules specifically restricting employees from discussing or disclosing information regarding wages, benefits or working conditions
Rules against joining outside organizations or voting on matters concerning the employer

The Guidance warns that Category 3 rules are so broad that they substantially impact the exercise of NLRA rights, and employers generally do not have a legitimate interest is such expansive restrictions where narrower rules would serve the employer’s legitimate goals.

Although the Guidance establishes the framework that will be applied by the Board in assessing the legality of facially-neutral workplace conduct rules, the Guidance notes that how the new Boeing standard will apply to rules requiring confidentiality of discipline or arbitration remains unclear and such cases must be submitted by the Regions to the Board’s Division of Advice. Moreover, the Guidance cautions that the application of a facially-neutral rule against employees engaged in protected NLRA activity is still unlawful.

What’s an Employer to Do? Employers should review their employee handbooks and other policies and evaluate how their policies stack up under the new Three Category Test announced in the Guidance.

How Can An Employer Avoid Discrimination And Legal Liability When Implementing A Dress Code?

Published on: April 2, 2018 | by Lisa Gingeleskie

Although not required by federal or New Jersey law, many employers utilize policies, which govern appropriate dress and grooming standards for employees in the workplace. For example, when attending business meetings with visitors or clients, employers may require that employee attire reflect that of the individuals with whom that employee is meeting. In other circumstances, employees may simply rely upon common sense and good judgment regarding their appearance and clothing in the workplace or employers may choose to give employees examples of what is appropriate and inappropriate attire. In doing so, however, employers need to be mindful of the potential implications under federal laws such as Title VII of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities Act (“ADA”), or state laws like the New Jersey Law Against Discrimination (“NJLAD”).

Specifically, employers need to be aware of the following potential forms of discrimination that that may arise as a result of a dress code policy:

Disability: A policy that does not take into account a reasonable accommodation to its dress code for an individual with a disability may lead to claims under the ADA or NJLAD, unless doing so would result in undue hardship.
Religion: A policy that prohibits head coverings, for example, may lead to allegations of religious discrimination if that employee is required to wear certain head gear as part of his or her religious beliefs.
Race: A no-beard policy that prohibits men from having facial hair has been found to disproportionally impact African-American males and may lead to racial discrimination claims.
National origin: A dress code may not treat some employees less favorably because of their national origin. For example, a dress code that permits casual attire, but prohibits certain kinds of ethnic dress, such as traditional African or East Indian attire, would lead to claims of discrimination based on national origin.
Sex or gender: Requiring women to dress in traditional female clothing (i.e. skirts or dresses) may lead to discrimination claims based on sex or gender. Likewise, this same policy may lead to claims against transgender employees based on their gender non-conformity.

Given these potential risks, it is crucial that employers word their policy in such a way as to avoid discrimination and reduce exposure to legal liability.

Solution: Adopt a Clear Dress Code to Reflect the Employer’s Individual Business Environment.

A properly drafted dress code will not only help to maintain a professional atmosphere that is conducive to the employer’s business environment, but it will also help to limit an employer’s legal exposure given the aforementioned risks under both federal and state law. When implementing a dress code policy, employers should be mindful to incorporate the following:

Adopt a gender-neutral policy, which expressly states the employer’s business-related reasons for implementing the policy;
Consider different standards of dress for different job classifications, i.e. office versus warehouse;
Identify consequences for failing to comply with the dress code policy, including sending employees home without compensation for that day or for those hours not worked;
Include a provision addressing the availability of reasonable accommodations to the dress code policy under the ADA and NJLAD;
Consider including a provision stating that the employer’s policy does not intend to interfere with an employee’s Section 7 Rights. For example, a dress code that prevents an employee from wearing a button or slogan may be deemed unlawful if wearing the button or slogan is found to be protected, concerted activity. For a more complete discussion of what conduct amounts to “protected, concerted activity,” please see our previous “Social Media and Discipline” Toolkit Blast.
Include an acknowledgment page, which recognizes that the employee has received and reviewed the policy.

Finally, it is also very important that employers properly train supervisors and managers on implementing these policies to ensure that the policies are being applied consistently. If you have any specific questions about drafting a dress code or disciplining employees for violating a dress policy, please contact our office directly.

What are the Legal Risks of Disciplining Employees for Social Media Use in the Workplace?

Published on: March 2, 2018 | by Lisa Gingeleskie

Employees’ use of social media in the workplace can be harmful to employers both legally and from a public relations standpoint. It can decrease company morale in the event employees choose to use social media as a forum to complain about their employer. It can also be costly to employers, as it may result in a loss of productivity during work hours. The use of social media also poses a threat that trade secrets or confidential information will be disclosed, even if done so unintentionally. Given these risks, employers may find themselves inclined to discipline employees for engaging in social media in the workplace, particularly when the subject matter is adverse to the employer.

However, employers seeking to discipline employees for social media posts must consider the application of the National Labor Relations Act (NLRA) to this area before doing so. The NLRA protects the right of employees to exercise “Section 7 Rights,” which guarantees employees the right to self-organize, form, join or assist unions, collectively bargain for changes in wages and working conditions, and engage in other “protected concerted” activities. What constitutes protected concerted activity is relatively broad, but must involve a term or condition of employment (wages, hours, etc.) and must occur for the group’s mutual aid and protection (more than one employee). An employer commits a violation when it engages in conduct that reasonably tends to interfere with the free exercise of employee rights regardless of the employer’s intent. Thus, an employer that discovers through social media that employees are undertaking activities to change their workplace, even if adverse to the employer, must be mindful not to make a negative employment decision based on this information or risk being in violation of the NLRA.

Solution: Adopt a Clear Social Media Policy and Apply it Consistently to All Employees.

A properly drafted and uniformly enforced social media policy is an employer’s most effective tool in protecting itself against both legal liability and potential damage to its reputation. Not only will a clear policy help to limit an employer’s legal exposure, it will also assist in managing employee expectations and ideally limit negative employee behavior. When implementing a social medial policy, employers should be mindful to incorporate the following:

Advise that all workplace equipment, including computers and workplace email, are employer property. Employees should understand that they have limited privacy in their use of workplace computer systems, and that employers have the right to monitor this equipment at any time;
Identify what employees, if any, may use social media as part of their job duties, for marketing, public relations, recruitment, corporate communications or other business purposes;
Identify the company’s level of tolerance for personal use of social media. If the employer does not tolerate any use of social media in the workplace, a zero tolerance policy needs to be clearly stated;
Advise that all employees are responsible for protecting the company’s goodwill, brands, and business reputation;
Advise that all employees are to respect intellectual property and confidential information;
Advise employees not to post anything that the company’s customers, clients, business partners, suppliers or vendors would find offensive (including ethnic slurs, sexist comments, discriminatory comments, insults or obscenity); and
Identify methods for monitoring and enforcing the policy as well as the consequences for violating the policy.

If you have any questions about disciplining employees for use of social media in the workplace or any specific questions about implementing a social media policy, please contact our office directly.

DOL & NLRB Reverse Positions Seen As Anti-Employer

Published on: January 15, 2018 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

The change in administrations has brought a series of reversals of the Obama era’s less than employer-friendly positions by the U. S. Department of Labor (DOL) and the National Labor Relations Board (NLRB or Board). This article highlights some of the favorable recent developments from these agencies that may be a harbinger of better things to come in 2018.

DOL REINSTATES 17 FAVORABLE OPINION LETTERS WITHDRAWN BY THE PRIOR ADMINISTRATION

For many, many years, the DOL issued official written Opinion Letters in direct response to employer questions regarding the interpretation and implementation of federal labor laws. Although they do not create law, Opinion Letters set forth the DOL’s position on how the Fair Labor Standards Act (FLSA) and other laws apply to very specific circumstances presented by employers seeking the DOL’s guidance. Under the FLSA, an employer who relies in good faith upon an Opinion Letter issued by the DOL is shielded from liability for violations of the minimum wage and overtime requirements of the FLSA, so long as the facts pattern surrounding challenged practice is identical to that contained in the relied-upon Opinion Letter.

In a departure from that prior practice, in March of 2009 the Obama administration withdrew various DOL Opinion Letters issued in the waning days of the Bush administration “for further consideration by the Wage and Hour Division” of the DOL. In addition, the DOL opted to issue “Administrator Interpretations” rather than formal Opinion Letters. Administrative Interpretations are more general interpretations that will not shield an employer from liability if relied upon. In June 2017 the Trump administration DOL announced that it would revive the practice of issuing Opinion Letters, and on January 5, 2018, reinstated 17 DOL Wage and Hour Division (WHD) Opinion Letters addressing various issues under the FLSA. The return to Opinion Letters as opposed to Administrator Interpretations is a favorable development for employers.

The 17 re-issued Opinion Letters cover a wide range of topics under the FLSA, and many are industry specific with little or no application to most employers. (Click here for a complete list of the re-issued Opinion Letters). Among those that have a broader application to all employer include:

FLSA 2018-5, FLSA 2018-9 and FLSA 2018-11, addressing whether a salaried exempt employee who is absent for one or more full days but does not have time in his/her PTO bank to cover the absences, may be subject to a deduction of the full day’s absence from the employee’s pay by the employer. These revived Opinion Letters deemed such a practice permissible under the FLSA.
FLSA 2018-9 and FLSA 2018-11, addressing whether non-discretionary bonuses or other payments must be included in an employee’s regular rate of pay under the FLSA.

However, employers should keep in mind that he reissued opinions do not offer anything new, but simply revive prior opinions that had been put on hold by the prior administration.
While this is a positive development for employers, a word of caution: before relying upon a DOL Letter Opinion to support a wage or other workplace practice, employers must review the situation carefully to ensure that the facts at issue are virtually identical to the facts underpinning the DOL’s guidance. Absent such conformity, the employer will unable to invoke the affirmative defense of reliance upon the DOL’s interpretive guidance, and if the practice violates the FLSA (or other law) the employer faces significant liability.

DOL DISPENSES WITH INFLEXIBLE SIX-FACTOR TEST IN FAVOR OF “PRIMARY BENEFICIARY’ TEST TO ASSESS THE LEGITIMACY OF UNPAID INTERNSHIPS UNDER THE FLSA

On January 5, 2017 the DOL announced that it was ditching its inflexible six-factor test previously used to determine if unpaid interns working for for-profit entities qualified as employees under the Fair Labor Standards Act (FLSA), in favor of a more flexible approach that may make unpaid internships more appealable to employers.

The DOL’s old six-factor test was an all-or-nothing approach, where interns were presumed to be employees entitled to minimum wage and overtime payments under the FLSA unless the employer could meet each one of the test’s six factors. Included among the factors was consideration of whether the employer derived any immediate advantage from the intern’s activities; if so, the test was not satisfied and the intern was deemed an employee entitled to minimum wage and overtime payments. The test was so stringent that many employers shied away from internship opportunities, depriving unskilled students the opportunity to gain valuable work experience to add to their resumes.

Unlike the old six-factor test, not all of the seven factors of the new “primary beneficiary test’ need to be satisfied to qualify as a legitimate unpaid internship. In addition, the seven factors are not exhaustive, and courts are free to consider other relevant factors when assisting the relationship. Under this new balanced approach, a business can fail to meet some of the factors but still meet the overall requirements. Moreover, while many factors of the new test are similar to those of the old DOL test, the primary beneficiary test dispensed with the previously disqualifying factor that considered whether the employer received any benefit from the employee’s services. Now, employers can receive benefits from an unpaid intern’s services, so long as the factors of the test establish that the primary beneficiary of the relationship is the intern.

The seven factors of the “primary beneficiary test” identified by the DOL are:

The extent to which the intern and the employer understand that there will be no compensation, express or implied, for the services.
The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including clinical and other hands on training provided by educational institutions.
The extent to which the internship is tied to the intern’s formal education program by integrated coursework or academic credit.
The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
The extent to which the internship’s duration is limited to the period in which the internship provided the intern with beneficial learning.
The extent to which the intern’s work complements rather than displaces the work of paid employees, while providing significant educational benefits to the intern.
The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The DOL emphasized that no single factor is determinative, and the decision of whether an intern is an employee under the FLSA will be determined on a case-by-case basis. However, on balance the employer must show that the intern, not the employer, is the primary beneficiary of the relationship.

The DOL’s shift to the “primary beneficiary test” is by no means a green light for employers to avoid minimum wage and overtime requirements by characterizing employees as unpaid interns, but it may pave the way for more unpaid internship programs that are highly beneficial students and employers. Employers must still carefully evaluate each of the factors to determine if the “primary beneficiary test” is met, and should consult with employment counsel before deciding to initiate an unpaid internship program.

NLRB CHANGES COURSE ON RECENT ANTI-EMPLOYER DECISIONS

Under the Obama administration, the NLRB issued numerous decisions that sparked considerable controversy among employers. Thankfully, last week the newly-constituted Board issued a series of opinions aimed at invalidating certain anti-employer decisions that were at the heart of the controversy, some of which are discussed below.

Browning-Ferris Joint Employer Test Abandoned. In a previous newsletter, we expressed concern about the Board’s decision in Browning-Ferris, which created a new “joint employer” test that greatly expanded the potential for a joint employer finding. Under Browning-Ferris, two or more business entities could be conferred joint employer status if they reserved potential joint control, indirect or limited, over the other employer’s workers, even if that control was never actually exercised. That 2015 ruling departed from the previous Board standard that was in effect for over 30 years.

In Hy-Brand Industrial Contractors, 365 NLRB No 156 (2017), the Board reverted to the pre-Browning-Ferris standard, declaring that joint employer status requires proof that i) the putative joint employer actually exercised joint control; ii) the control was direct and immediate rather than indirect; and iii) the control exercised was not “limited and routine” control. The Board emphasized that return to its prior test “provided certainty and predictability” to long-standing third-party business relationships that include subcontracting, outsourcing and temporary staffing that were being jeopardized by the discarded Browning-Ferris test.

In light of this decision, it remains to be seen whether the Senate will move forward with pending legislation already passed by the House of Representatives aimed at negating the Browning-Ferris holding.

Lutheran Heritage Standard for Assessing Legality of Employer Handbooks Abandoned. In its 2004 decision in Lutheran Heritage Village-Livonia, the Board announced a new standard for determining whether an employer’s facially-neutral rules, handbooks or policies addressing workplace conduct unlawfully restricted employees’ Section 7 rights under the National Labor Relations Act (NLRA) to engage in protected concerted activity. Under the Lutheran Heritage standard, even facially-neutral employer policies were deemed illegal if the Board determined that employees could “reasonably construe” them to “chill” employees’ free exercise of Section 7 rights. As addressed is several of our previous newsletters, in recent years even the most innocuous employer policies were subject to the Board’s contorted analysis that found nearly every effort to control employee conduct (e.g., policies restricting recording devices, speaking to the media, civility rules, social medial policies) were unlawful, without regard for the employer’s rationale for the policy.

Thankfully, in The Boeing Company, 365 NLRB No. 154 (2017) the newly-constituted Board recognized that the Lutheran Heritage standard did not give adequate weight to the employer’s interests and eliminated the standard in favor of a more balanced approach. Under the new standard, when analyzing a facially-neutral rule, policy or handbook that had the potential to interfere with Section 7 rights, the following two factors must be considered: i) the nature and extent of the potential impact on employees’ NLRA rights; and ii) the employer’s legitimate justifications associated with the rule. The Board also laid out the following three categories by which it will classify employer rules:

Category 1: Rules that cannot be reasonably construed to interfere with Section 7 rights, or any potential interference is outweighed by the business justification for the rule. Examples of category 1 rules include those requiring “harmonious interactions and relationships,” and other rules requiring employees to observe basic standards of civility in the workplace.

Category 2: Rules where the Board determines that maintenance of the rule is unlawful after conducting individualized scrutiny in its adverse impact on Section 7 rights that is not outweighed by any of the employer’s business justifications.

Category 3: Rules that limit Section 7 rights in such a way that they will be unlawful in all cases. An example of a Category 3 rule is one prohibiting employees from freely discussing wages or benefits with each other.

In light of The Boeing Company ruling, employers may want to revisit those workplace rules and handbooks that were likely revised to comply with the Lutheran Heritage standard and the Obama administration’s vigorous attack upon handbooks under this discarded precedent.

Specialty Healthcare Abandoned. In 2011 the Board departed from decades of precedent and announced a new standard for determining whether a bargaining unit proposed by a union was appropriate. The ruling ditched the traditional “community of interests” standard for one that made it easier for unions to target a smaller number of employees to creating multiple “micro-units” that employers would have to negotiate with. Employers claimed the new standard opened the door for gerrymandering larger workforces to create smaller units that were more likely to succeed in an organization drive.

In its December 15, 2017 decision in PCC Structurals, Inc., the Board announced that it was abandoning the Specialty Healthcare standard and returning to the prior “community of interests” standard for determining the proper scope of a bargaining unit, a standard that will diminish the number of units employers will have to deal with during organization.

Call for Comment on the “Quickie Election” Rule: In 2004 the Board adopted what is commonly referred to as “the quickie election” rule that accelerated the timeline for union elections, and significantly reduced the time period historically available to employers to campaign against unionization.

On December 11, 2017 the Board asked for public comment on whether the rule should be i) rescinded; ii) retained without change; or iii) modified, and if so, what modifications should be made. In addition, the Board seeks the public’s comments on whether, if rescinded, the Board should return to the election rules previously in place; or whether those rules should be modified.

Bottom Line: Both the DOL and the Board’s previous eight years saw many changes in long-established agency precedents, actions that were accompanied by vigorous opposition in the business community. The DOL’s and Board’s return to their respective prior standards certainly signals a more employer-friendly environment going forward, but only future actions by the DOL and the Board will show whether such optimism was justified.

NLRB Decision Allows Employees to Record Workplace Conversations

Published on: March 9, 2016 | by Sergio D. Simões

With the advance of mobile technologies, employers are faced with the growing probability that employees are utilizing these devices to record conversations or other conditions in the workplace. Currently, approximately 38 states, including New York and New Jersey, have laws which permit a party to surreptitiously record a conversation if one party to the conversation has given permission to be recorded while other states including Pennsylvania, Connecticut, and Florida, require all parties involved in the recording to consent. These laws do not, however, touch upon an employer’s ability to regulate recordings in the workplace, and employers have generally assumed they were free to enact policies prohibiting or limiting recordings by employees. However, in a recent decision the National Labor Relations Board (the “NLRB” or “Board”) held that it is a violation of Section 7 of the National Labor Relations Act (the “Act”) for an employer to maintain a policy that restricts or prohibits employees from recording conversations with management without prior management approval. Section 7 gives employees the right to freely discuss terms and conditions of employment and to act in concert with one another for their mutual aid and protection.

The decision, Whole Foods Market, Inc. and United Food and Commercial Workers, Local 919, et al, arose out of a policy in Whole Foods Market’s General Information Guide prohibiting employees from recording “phone calls, images, and company meetings with any recording device…” unless prior approval was received from management, or unless all parties to the conversation consented to the recording. Whole Foods’ no-recording policy was aimed at eliminating the “chilling effect” on the free expression of views that would otherwise arise if employees believed or suspected that they were being recorded on a device.

The NLRB took the opposite view, concluding that policies prohibiting employees from recording in the workplace without prior approval by management violate the Act because that policy has a “chilling effect” on the employee’s rights to engage in protected concerted activity under the NLRA. According to the NLRB, protected conduct that might be negatively affected by prohibitions on recording include, for example, recording of images of protected picketing, documenting unsafe workplace equipment or hazardous working conditions, documenting and publicizing discussions about terms and conditions of employment (such as a meeting to discuss potential discipline), documenting inconsistent application of employer rules, or documenting evidence for later use in judicial or administrative actions. The NLRB determined that photography and recording in the workplace is an “essential element” in preserving and vindicating labor rights under the Act. Whole Foods was thus ordered to withdraw its policy and post notice of its violation.

It is likely that this case will be appealed through the federal courts, and possibly to the United States Supreme Court. However, until the law has been settled by the courts, employers should confer with employment counsel before implementing policies that could stifle employees’ rights to organize, including policies that forbid recording or photography in the workplace without prior consent. Employers with existing “no-recordings in the workplace” policies should do likewise to ensure that these policies do not run afoul of NLRA protections.

National Labor Relations Board Continues to Invalidate Arbitration Agreements Containing Class Action Waivers, Backing Federal Court Rulings

Published on: February 23, 2016 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

In its recent decision in Murphy Oil USA, Inc., the National Labor Relations Board (NLRB) reaffirmed its earlier decision in D.R. Horton, Inc., that requiring employees as a condition of employment to waive their right to bring class, collective or joint actions violate the National Labor Relations Act (NLRA). The NLRB’s ruling is at direct odds with a ruling from the Fifth Circuit Court of Appeals that overruled the D.R. Horton decision and held that class action waivers in arbitration agreements do not violate the NLRA, so long as employees retain the right to bring individual claims. The Second and Eighth Circuits have likewise rejected the NLRB’s reasoning in D.R. Horton.

Facts: Murphy Oil required all job applicants and current employees, as a condition of employment, to sign a “Binding Arbitration Agreement and Waiver of Jury Trial.” The Agreement provided that disputes related to employment shall be resolved by binding arbitration and that the parties “waive their right to commence or be a party to any group, class or collective action claim in arbitration or any other forum.” Sheila Hobson signed this Agreement when she applied for employment with Murphy Oil in 2008. Two years later, Hobson and three other employees filed a federal collective action against Murphy Oil alleging violations of the Fair Labor Standards Act (FLSA). In response, Murphy Oil filed a motion to compel the plaintiffs to arbitrate their claims on an individual basis. That motion was granted by the federal court and the action was stayed pending arbitration of the individual claims.

Subsequently, the NLRB General Counsel issuing a complaint alleging Murphy Oil violated Section 8(1)(a) of the NLRA by maintaining and enforcing a mandatory arbitration agreement prohibiting employees from engaging in protected, concerted activities.

The Ruling: Despite the Circuit Courts rejection of D.R. Horton, the NLRB maintained its previous position and held Murphy Oil’s arbitration agreement and its efforts to enforce that agreement in court violated Section 8(a)(1) of the NLRA because it prohibited employees from collectively pursuing employment-related claims in any forum, a substantive right provided by Section 7 of the NLRA. The three-member majority faced its break with the federal courts head on, stating, “[i]n sum, we have carefully considered, and fully addressed, the views of both the Federal Appellate courts that have rejected D.R. Horton and the views of our dissenting colleagues. We have no illusions that our decision today will be the last word on the subject, but we believe D.R. Horton was correctly decided, and we adhere to it.”

In his searing dissent, Board Member Johnson chastised the majority for “refusing to follow the clear instructions” from the United States Supreme Court on the interpretation of the NLRA, an error compounded by the majority’s rejection of the Supreme Court’s instruction that the Federal Arbitration Act reflects a public policy favoring arbitration.

Takeaway: The NLRB’s reaffirmation of its reasoning and position in D.R. Horton solidifies its position that binding arbitration agreements with class action waivers violate the NLRA and are unenforceable. The directly conflicting stances between the NLRB and the federal courts will undoubtedly result in future litigation and ultimate resolution of the issue by the Supreme Court.

As a result, employers outside of the Second, Fifth and Eight Circuits with arbitration agreements that include class waivers, or those considering such agreements, must take into account the conflicting stances as well as the possibility of a challenge by the NLRB if they move to enforce individual arbitration of disputed claims until the Supreme Court resolves the issue.

Unfair Labor Practice Charges Dropped By Employees Allegedly Threatened For Social Media Posts

Published on: November 4, 2015 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

As part of a recent labor contract deal between the nurses’ union and Meridian Health in New Jersey, the union agreed to withdraw an unfair labor practice charge filed with the National Labor Relations Board (“NLRB”) alleging Meridian unlawfully threatened nurses who posted social media messages in support of the union’s ongoing contract negotiations with Meridian. Meridian Health had responded to the charges by acknowledging that it maintained “a comprehensive social media policy that outlines exercising good judgment and refraining from communicating patient information or proprietary information of Meridian.”

Although the spat between Meridian and the union was averted by the contract settlement, it serves as yet another illustration of the risks faced by employers who take action against employees for their social media activities. Both union and non-unionized employers must be mindful of the significant protections accorded to employees who engage in work-related social media communications. Section 7 of the National Labor Relations Act (“NLRA”) provides that “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…” In the Meridian case, the union charged that the hospital’s threats against nurses for their pro-union posts ran afoul of these NLRA rights.

Through a series of reports, the NLRB has recognized that employee social media communications may indeed constitute protected concerted activity under Section 7. For employers with a unionized workforce, the NLRB has predictably observed that employee posts pertaining to collective bargaining, strikes or other labor actions are examples of protected activity. Moreover, the NLRB has reaffirmed that Section 7 rights also extend to non-unionized workplaces, and thus employee social media communications addressing disciplinary actions, wages, or any other terms and conditions of employment may likewise be protected under the NLRA. In several recent rulings the NLRB declined to strip employee posts of Section 7 protection even though they were laced with profanities and disrespectful comments about the employer.

Determining whether an employee’s social media post constitutes a protected concerted activity is highly fact sensitive, making it difficult to predict whether the communication will be deemed protected. Employers considering action against an employee for social media activities, even if those posts are overtly negative and disparaging of the employer, should consult with employment counsel before taking action to avoid an unfair labor practice charge for chilling protected employee speech.

Additionally, all employers should review their workplace policies regulating employees’ social media activities. In its May 2012 General Counsel Memorandum on social media policies the NLRB observed that the mere existence of a social media policy that could reasonably be construed by employees to chill the exercise of speech protected by Section 7 is a violation of the NLRA. The memorandum addressed numerous clauses commonly found in social media policies which, according to the NLRB, were overbroad or ambiguous and thus could be interpreted by employees as prohibiting them from freely discussing terms and conditions of employment. The memorandum cautioned that these policies should be narrowly tailored to ensure that they do not have a chilling effect on Section 7 rights and should clearly carve out protected discussions among employees regarding wages and benefits, discipline, working conditions and other terms and conditions of employment. The NLRB also noted that a general savings clause advising employees that the social media policy will not be applied to any employee communications protected under Section 7 will not cure any otherwise overbroad and ambiguous provisions. In light of increasing scrutiny by the NLRB, employers should consult with employment counsel when drafting and reviewing company handbooks and policies to avoid violating employee rights under the NLRA.

Company Email Can Now Be Used By Employees For Union Activity

Published on: February 2, 2015 | by John H. Schmidt, Jr.

Section 7 of the National Labor Relation Act protects employees’ right to communicate with one another regarding their terms and conditions of employment and to engage in unionization activities at the jobsite. However, the National Labor Relations Board (“NLRB”) historically held that employers may place reasonable restrictions on employees’ conduct and communications while on employer property and while on working time without violating Section 7 rights. Consistent with those holdings, in 2007 the NLRB issued its ruling in, holding that employers could prohibit employees from using the employer’s email system to communicate with each other about union matters or other terms and conditions of employment, even if employees were permitted access to the email system for other purposes.

That all changed with the NLRB’s recent ruling, reversing the decision. Effectively immediately, employees provided access to employer email systems for work activities may now be permitted to use these systems during non-work time for “statutorily protected communications” concerning unionization efforts, salaries and benefits and other terms and conditions of employment. Employers looking to restrict email access for such purposes must demonstrate that the measures are necessary to maintain production, discipline or other “special circumstances” warranting restriction of these employee rights. However, the NLRB cautioned that “because limitations on employee communication should be no more restrictive than necessary to protect the employer’s interests, we anticipate that it will be the rare case where special circumstances justify a total ban on nonwork email use by employees.”

In ruling in favor of employee access to email systems for Section 7 activities during non-work time, the NLRB pointed to a recent observation by the U.S. Supreme Court that email has become a fundamental means of communication in the workplace and “some personal use of employer email systems is common and, most often, is accepted and tolerated by employers.” The NLRB concluded that employees’ Section 7 rights trump an employer’s property rights to its communications systems.

In addition, the NLRB blurred the line between permissible email communications during work time and impermissible communications during non-work time, noting “that email use may be somewhat difficult to identify as occurring on working time or nonworking time. But the blurring of the line…reflects far broader developments in technology and the structure of current workplaces (which enable not only the performance of personal business during working time but also the performance of work during nonworking time). Those developments are beyond” the control of the NLRB.

The NLRB acknowledged that its decision is only applicable to employees; it does not expand upon the rights of non-employees (eg: union organizers) to use employer communication systems. Moreover, the NLRB acknowledged that its decision is limited to those employers who chose to provide email access to employees for work purposes, but does not compel employers to provide email access to employees. Finally, the NLRB confirmed that employers may monitor employee emails for legitimate purposes, such as ensuring employee productivity or preventing unlawful harassment of employees through the use of the email system, so long as the employer does not do anything “out of the ordinary,” such as increasing monitoring during a union organizational campaign.

The Bottom Line: As a result, employers who provide employee access to email systems cannot discipline employees for emails to co-workers that relate to wages, discipline, benefits, working conditions and other terms and conditions of employment or to encourage forming a union, provided these communications occur during “non-work” time. The NLRB stated its view that determining when employees are engaged in “non-work” time in the electronic age is an elusive task, suggesting that minimal use of the employer’s email for protected communications during “work time” is most likely permissible provided it is not abused by employees.

Appeals Court Silences Teacher’s Claim That Her Facebook Post Referring to Students as “Future Criminals” was a Violation of Her First Amendment Rights

Published on: March 7, 2013 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Employment Law Newsletter

In , the Appellate Division of the New Jersey Superior Court recently upheld Jennifer O’Brien’s termination for conduct unbecoming a teacher by posting the following comments on Facebook: “I’m not a teacher – I’m a warden for future criminals!” and “They had a scared straight program in school – why couldn’t [I] bring [first] graders?” First, the court agreed with the finding below that O’Brien was not commenting on a matter of public concern, namely student behavior in the classroom, in which case the comments may have been protected by the First Amendment. Rather, the court reasoned that O’Brien was making personal statement driven by her dissatisfaction with her job and her students’ conduct. Finally, the court observed that even if the comments were on a matter of public concern, O’Brien’s First Amendment rights to make such comments was outweighed by the school district’s interest in the efficient operations of its schools.

Although this decision has limited application outside of the public sector because First Amendment rights do not extend to private sector employment, it nonetheless serves as a heartening sign that under the right circumstances the courts will uphold the termination of an employee who makes damaging comments about the workplace on social media. While this decision did not involve a challenge of O’Brien’s communications as commentary about workplace conditions protected by Section 7 of the NLRA, it would be interesting to see how far the NLRB would push the boundaries of protected activity under these circumstances.

Runaway Train Stopped in its Tracks?

Published on: March 7, 2013 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Employment Law Newsletter

In a decision that may ultimately negate any post January 2012 decisions issued by the National Labor Relations Board (NLRB), the D.C. Circuit Court of Appeals in January 2013 struck down as unconstitutional three controversial “recess” appointments to the NLRB by President Obama. The court held that the presidential power to make appointments when Congress is in “recess” (and therefore unavailable to vote on the nominations) does not apply to a generic break in Congressional proceedings for several days. The President’s nominations were made in January 2012 when the Senate was not in recess but was meeting in sessions every three days and thus were unconstitutional from their inception.

Although the issue is far from settled – the U.S. Supreme Court has decided to hear the recess appointments issue – the questionable status of the currently constituted Board may be fatal to a slew of decisions issued under the recess appointees. At issue in many of these rulings was whether employer policies and practices infringed upon employees’ rights under Section 7 of the National Labor Relations Act (NLRA) to engage in “concerted activity,” including discussion of the terms and conditions of employment with coworkers. Although the NLRA was historically implicated in unionized workplaces, its protections apply to non-unionized workplaces as well, and non-unionized employers are increasingly targeted by the NLRB for violations of the Act. These decisions have created a firestorm among employers, who view the NLRB’s recent pronouncements as pro-union attacks upon employers’ abilities to reasonably manage their workplaces. Below is a summary of some of the Board’s more controversial rulings:

Company rules precluding employees from disparaging the employer, disclosing confidential information or communicating with third parties continue to be struck down by the NLRB. In , the Board reiterated that its determination of whether employee conduct policies unlawfully restrict Section 7 rights turns on whether 1) employees would reasonably construe the language as prohibiting protected Section 7 activity; 2) the rule was promulgated in response to union activity; or 3) the rule was applied to restrict the free exercise of Section 7 rights. Applying this test, the Board concluded that a provision of Costco’s employee handbook requiring employees to use “appropriate business decorum” when communicating with others was simply an effort to promote a civil workplace and could not reasonably be construed to prohibit protected communications. Conversely, the handbook’s rule prohibiting messages that “damage the Company, defame any individual or damage any person’s reputation” could reasonably be interpreted by employees as prohibiting protected communication critical of the employer or its terms and conditions of employment, and thus could “reasonably tend to chill employees” in their exercise of Section 7 rights.

A mere three weeks later in , the Board considered an employee handbook rule stating “Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.” Applying the three factors discuss above, the Board found that the broad prohibition against “disrespectful” behaviors and “language which injures the image or reputation of the dealership” could be construed by employees to encompass protected Section 7 activity, such as employee complaints about management and working conditions to co-workers, supervisors or other third parties in an effort to secure support for changing these workplace conditions.

Finally, on the day that the D.C. Circuit struck down the President’s recess appointments, the Board audaciously issued its decision in , once again striking down several employer policies. The first attack was on the employer’s policy instructing employees not to contact the media about company matters. Whereas the rule did not carve out unprotected communications, the Board concluded that the restriction could be construed as prohibiting employees’ communications with the media about labor disputes in violation of Section 7. The second policy to fall required employees to refer all workplace inquiries by law enforcement to management for further handling. The Board found the policy overly broad because employees could reasonably conclude that investigations into NLRA violations by NLRB agents would be included within the “law enforcement” encounters to be referred to management. Lastly, the Board stuck down the company’s confidentiality rule instructing employees to never discuss “details about your job, company business, or work projects with anyone outside the Company” and to never “give out information” about the company’s customers. The Board reasoned that these restrictions were a violation of Section 7 rights because they could be reasonably be interpreted by employees as barring employee discussions about wages, discipline, performance ratings and other terms of conditions of employment.

Blanket policy requiring employers to keep workplace complaints confidential unlawfully interfered with employee’s Section 7 rights. In (July 2012) the NLRB ruled that the employer’s routine policy to warn employees involved in HR investigations to refrain from discussing the investigation with other employees violated Section 7 rights. The Board reasoned that such blanket confidentiality policies preclude employees from discussing problems in the workplace amongst themselves. Although many HR professionals agree that such confidentiality directives are warranted by best practices, the NLRB announced that before imposing confidentiality requirements, an employer must conduct a case-by-case analysis to determine if confidentiality was necessary to 1) protect witnesses; 2) prevent the destruction of evidence; 3) prevent fabricated testimony; or 4) prevent a cover-up. If one or more of these factors were present, the employer would have a “legitimate business justification for the confidentiality expectation” that trumped employees’ Section 7 rights to discuss the investigation.

Employers may be required to surrender confidential statements secured during workplace investigations to unions. Traditionally, confidentiality of witness statements secured by employers has been a key component of investigations into workplace harassment and other misconduct. Along the lines of the decision, in (Dec. 2012), the NLRB overruled 34 years of Board precedent that categorically exempted written witness statements from an employer’s production obligations to a union seeking information under the NLRA. Rather, the Board adopted a “flexible approach” that “adequately protects the interest of the employer and witnesses, while preserving the general right of requesting unions to obtain relevant information.” Under the new ruling, an employer refusing to produce a witness statement must prove “that a legitimate and substantial confidentiality interest exists” that outweighs the union’s need for the information. As a result, unions are encouraged to request all statements related to workplace investigations, while employers face the prospect of ineffective investigations because witnesses to misconduct will likely be discouraged from being candid for fear that their statements will be disclosed.

Employees’ Facebook venting about a co-worker’s criticism of their job performance was protected concerted activity. In (Dec. 2012), the NLRB considered whether the termination of five employees for their off-duty Facebook posts complaining about a co-worker’s habit of criticizing them for not doing enough work was a violation of Section 7 rights. The target of the employees’ comments complained that she was being harassed by her co-workers, who were then terminated for violating the employer’s “zero tolerance” policy against bullying and harassment in the workplace. The employees filed charges with the NLRB claiming that their off-duty posts constituted protected concerted activity under Section 7. The NLRB agreed, notwithstanding the fact that the posts were about a co-worker and not a member of management, and the posts by the employees did not appear to indicate that these co-workers intended to do anything about the situation. The Board reasoned that merely expressing a similar viewpoint or discussing terms and conditions of employment with co-workers may be protected because a mutual aid object can be “implicitly manifested” from the surrounding circumstances. The lone dissenting member of the Board noted that the employees’ comments appeared to be more like “venting” rather than a “call for action” protected by the NLRA.

Clearly, this decision places employers in the no-win situation of risking NLRB action for enforcing workplace conduct policies, or alternatively, taking no action and risking negligent retention, workplace bullying and emotional distress claims from the victim of the workplace behaviors. This latest decision addressing Facebook firings serves as an additional caution signal to employers contemplating discipline for violations of workplace conduct rules in employee’s social networking activities.

Non-union employer’s mandatory arbitration agreements interfere with employees’ Section 7 rights. Bucking the trend of recent U.S. Supreme Court decisions heavily favoring arbitration as a means to resolve employment disputes, the NLRB continues to invalidate arbitration agreements that, in the eyes of the Board, interfere with employees’ Section 7 rights. In (Jan. 2012) , the employer required employees to execute an arbitration agreement mandating arbitration of all employment related disputes, and waiving class action claims in any forum. The NLRB ruled that an agreement precluding collective actions by employees unlawfully interfered with employees’ rights to engage in “concerted action for mutual protection.” Whereas this decision appears to violate several recent decisions of the Supreme Court permitting arbitration and class action waivers of employment disputes, the decision is currently subject to a hotly contested appeal before the 5th Circuit Court of Appeals.

Undaunted by the fact that most federal courts have rejected the NLRB’s rationale in in favor of the Supreme Court’s sanction of mandatory arbitration agreements, the NLRB once again kyboshed an agreement mandating arbitration of employment disputes. (Dec. 2012) involved a challenge to the termination of several employees who refused to execute the employer’s alternative dispute policy requiring arbitration of all employment related disputes, but containing a disclaimer permitting employees to file charges with a “government agency” (which arguably included the NLRB). The Board found that the policy on the whole was ambiguous because it did not include an express carve-out reference to the NLRB or actions under the NLRA, and thus could reasonably be interpreted by employees as limiting access to the Board for violations of the NLRA.

Pending further review of the NLRB’s aversion to enforcing agreements to arbitrate employment disputes in non-union workplaces, employers should consider revising their alternative dispute agreements to include a statement that employees are free to pursue claims before the NLRB to vindicate alleged violations of Section 7 rights.

The rulings discussed above are consistent with the Board’s prior attacks on commonplace provisions in codes of conduct, social networking policies, confidentiality requirements and other rules found in employee handbooks and policies. Although a seemingly reasonable solution to these dilemmas would be the inclusion of language indicating that the rule would not be applied to concerted conduct protected by Section 7, such disclaimers were deemed insufficient to cure the policy’s infringement on protected activity in guidance issued by the NLRB’s Acting General Counsel earlier this year.

The NLRB has indicated that it has no intention of staying its hand while the D.C. Circuit’s recess appointment ruling is challenged before the U.S. Supreme Court. Although the Board’s rulings may be nullified if the Supreme Court agrees that the recess appointments were unconstitutional, the Administration has resubmitted the nominations of two of the recess appointees, urging that they be subject to a simple up or down vote before the Senate. Ultimately, the take away from the NLRB’s recent activity is that employer policies restricting employee conduct or communications must be very narrowly tailored to survive NLRB scrutiny and its recent interpretations of employee rights under the NLRA. Employers should consult with employment counsel to assess whether their handbooks and policies should be revised to avoid being in the cross-hairs of the current or future NLRB.