Search Results for: "section 7"

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.

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:

1. The extent to which the intern and the employer understand that there will be no compensation, express or implied, for the services.
2. 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.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provided the intern with beneficial learning.
6. 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.
7. 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.

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.

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.