The U.S. Court of Appeals for the District of Columbia has ruled that AT&T had a right to forbid employees, when interacting with the public, from wearing t-shirts that the company reasonably believed could harm its relationship with customers or its public image.  InSouthern New England Telephone Company v. National Labor Relations Board, Nos. 11-1099 and 11-1143 (D.C. Cir. July 10, 2015), the court vacated and refused to enforce a decision by the National Labor Relations Board (“NLRB”) that found the company’s actions unlawful.

The court’s decision involved AT&T employees in Connecticut whose union urged them during contract negotiations in 2009 to wear t-shirts on the job that said “INMATE” on the front and “Prisoner of AT$T” on the back.  The company permitted employees to wear the shirts in offices and other non-public workplaces, but instructed employees not to wear them when interacting with customers or working in public.  The company issued one-day suspensions to 183 employees who refused to comply.

The union filed an unfair labor practice charge claiming the discipline violated employee rights under the National Labor Relations Act.  The company responded that while employees may have the right to wear union shirts and buttons on the job, in this case AT&T did not have to allow them to enter customer homes wearing “inmate” and “prisoner” labels because the company reasonably believed the labels could offend customers and harm the company’s relationship with them.  The company was particularly concerned about how the shirts would be perceived in Connecticut in light of a recent and widely publicized home invasion in the state involving a triple murder, sexual assault and arson.

An NLRB administrative law judge ruled AT&T committed an unfair labor practice by banning the shirts in customer contact situations.  The NLRB affirmed that decision 2 to 1, concluding the company’s concerns were unfounded because the shirts “would not have been reasonably mistaken for prison garb.”  The dissenting NLRB member argued the company had the right to ban the shirts because it was reasonable for AT&T to be concerned that the shirts would alarm customers and damage the company’s reputation.

In overturning the NLRB decision, Circuit Judge Brett M. Kavanaugh wrote for a unanimous panel, “Common sense sometimes matters in resolving legal disputes.  This case is a good example.”  Citing prior NLRB decisions, the court said it is well established that when an employer can show “special circumstances,” its right to limit or prohibit the display of union insignia can outweigh an employee’s right to display it.  Such decisions have repeatedly recognized, the court said, that “an employer that reasonably believes its employees’ union apparel at work may damage the employer’s relationship with its customers or its public image may invoke the ‘special circumstances’ exception.”

The court recognized that while the employer bears the burden of establishing special circumstances, it can meet that burden “by demonstrating reasonable belief that the message may damage customer relations – even in the absence of evidence of actual harm.”  This conclusion rejected an argument the NLRB had made in its brief, claiming the company had shown no evidence of customer complaints or refusals to allow employees to enter their homes.  The court said such evidence was not necessary, citing a previous NLRB decision approving a preemptive ban on a t-shirt that stated “Don’t Cheat About the Meat!” without evidence of how customers actually reacted to it, and another decision that stated an employer “need not await customer complaint before it takes legitimate action to protect its business.”

The appellate court said it would not enforce the NLRB decision about the “INMATE” shirts because the NLRB had “applied the ‘special circumstances’ exception” to the AT&T case “in an unreasonable way.”  In particular, the court rejected the NLRB’s conclusion that because the shirt “would not have been reasonably mistaken for prison garb,” it was therefore not “reasonably likely, under the circumstances, to cause fear or alarm” among the company’s customers.  Noting that the NLRB’s expertise “is surely not at its peak in the realm of employer-customer relations,” the court said the appropriate test for “special circumstances” was not whether the shirt could be confused with actual prison garb, but “whether AT&T could reasonably believe that the message may harm its relationship with its customers or its public image.” 

Given the “straightforward evidence AT&T introduced of the shirt’s message and the circumstances under which customers interact with or can see employees wearing the shirt,” the court said, “the Board should have held that ‘special circumstances’ applied here.”  The court’s decision affirms the principle that when a company makes a reasonable business judgment about its own business and customers, the NLRB does not have the right to ignore this and substitute its own business judgment for that of the company.  It will be interesting to see how this concept is further developed in future decisions of the Board and the Courts of Appeal where the right of employees to display union insignia and the right of employers to protect customer relationships come into conflict.

After oral arguments were presented to the appellate court, AT&T sold its Connecticut operating subsidiary, Southern New England Telephone Company, to Frontier Communications, which currently operates the company.  AT&T remains the largest U.S. employer of full-time employees represented by unions.