The National Labor Relations Board (NLRB) rattled corporate America in 2012, issuing decisions generally viewed as highly favorable to unions and organized labor on a wide variety of topics. As in years past, however, the most dramatic story of 2012 remains the NLRB itself. No less than 14 appellate cases were filed in 2012 challenging the legitimacy of President Obama’s “recess” appointments. Without those appointments, most if not all decisions issued in 2012 are invalid. The last major challenge to the NLRB’s authority (whether a two-person Board could exercise the delegated authority of the NLRB) ended in a defeat for the NLRB at the hands of the Supreme Court in New Process Steel v. NLRB (2010). Employers are closely monitoring this latest crop of lawsuits as they make their way through the courts. In the meantime, employers must confront new compliance challenges and heightened enforcement by the NLRB.

Notice of Rights Posting: In 2012, the NLRB followed the lead of the U.S. Department of Labor and enacted a final rule requiring most private sector employers – both unionized and non-unionized – to post a notice advising employees of their rights under the National Labor Relations Act (NLRA), including the right to organize unions. In Nat'l Assn. of Manufacturers v. NLRB, the D.C. Circuit enjoined the enforcement of this rule while it decides if it is valid. The court's ruling further delays implementation of the final rule, initially set to take effect on November 14, 2011. The NLRB already had pushed back the effective date multiple times due to confusion and legal challenges.

Confidentiality of Workplace Investigations: This year the NLRB reversed course on its longstanding position allowing employers to direct employees to keep ongoing internal investigations confidential. In Banner Estrella Medical Center, the NLRB held that an employer violated Section 8(a)(1) of the NLRA by adopting a blanket confidentiality policy for internal workplace investigations. The NLRB ruled that employers (union and non-union) have the burden of showing, on a case-by-case basis, that there is a legitimate business need for confidentiality that outweighs employees’ Section 7 rights. Such proof could include a showing that, in a particular investigation, witnesses needed protection, evidence was in danger of being destroyed, testimony was in danger of being fabricated, or there was a need to prevent a cover up. In this regard, the NLRB noted that a generalized concern with protecting the integrity of employer investigations is insufficient.

Social Media: Section 7 of the NLRA limits an employer's right to restrict an employee from communicating via social media on issues such as wages, hours, benefits or other terms and conditions of employment. In August 2011 and January and May 2012, the NLRB's Acting General Counsel issued three Advice Memos giving his opinion on how the NLRA applies to employer social media policies and to employer discipline of employees for their social media use. On September 7, 2012, the NLRB also issued, for the first time, a decision addressing an employer's social media policy. In Costco Wholesale Corporation, the NLRB found unlawful a rule which read in pertinent part: "statements posted electronically . . . that damage the Company defame any individual or damage any person's reputation, or violate the policies outlined in the Costco Employee Agreement, may be subject to discipline, up to and including termination of employment." The NLRB determined that the rule was overbroad because employees could reasonably interpret the policy as prohibiting protected concerted activity, such as communications protesting Costco's treatment of employees.

In contrast, in Cox Communications, Inc., the Office of the General Counsel of the NLRB's Division of Advice determined that the social media policy at issue was lawful because it did not explicitly restrict employees from engaging in Section 7 activity and contained a saving clause that assured employees that the employer was not interfering with their right to engage in protected activity. Employers should carefully develop computer usage and social media policies that avoid overly broad provisions and proceed cautiously before disciplining or terminating an employee based on his or her social media use.

Class Action Waivers in Arbitration Agreements: The status of class action waivers in arbitration agreements remains highly controversial. On January 6, 2012, the NLRB issued a decision in D.R. Horton, Inc. holding that a mandatory arbitration agreement that waives employees' rights to participate in class or collective actions is unlawful under the NLRA. In 24 Hour Fitness USA, Inc., an Administrative Law Judge (ALJ) found a class action ban in an arbitration policy unlawful in spite of an opt-out provision. In his decision, the ALJ ordered the company to remove the prohibition from the employee handbook and to notify all arbitral or judicial tribunals where it had pursued enforcement of the clause that it desired to withdraw the request. D.R. Horton is currently on appeal before the Fifth Circuit Court of Appeals, and 24 Hour Fitness likely will be appealed as well (initially to the NLRB followed by possible court review). Federal courts that have considered this issue have not been receptive to the NLRB's position, and employers continue to closely monitor developments in this area.

Workplace Conduct: In 2012, the NLRB addressed work rules mandating some level of civility in the workplace. In Costco, discussed above, it ruled that the employer could require employees to use “appropriate business decorum.” In contrast, in Karl Knauz Motors, the NLRB found unlawful a rule requiring employees "to be courteous, polite and friendly" and stating that no one "should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership." The NLRB found that employees could reasonably construe the rule as encompassing Section 7 activity, such as employees’ protected statements that object to their working conditions and seek the support of others in improving them.

Work Rules: Access to the workplace was hotly contested in 2012. In Sodexo America, the NLRB found unlawful a rule which prohibited off-duty employees from entering the workplace except to conduct hospital-related business. This decision extended the NLRB's 2011 decision in Saint John’s Health Center holding that a work rule prohibiting off-duty employees from entering the workplace, except to attend hospital sponsored events, violated the NLRA. 

The NLRB also addressed work rules related to employees leaving their workstations. In TT&W Farms Products, the NLRB found that rules which prohibited employees from "walking off the job" or "willfully restricting production" were unlawful because they were likely to be interpreted as prohibiting protected activities such as a strike or work stoppage. In contrast, the NLRB upheld a work rule which prohibited employees from “leaving a workstation” without their supervisor's permission on the grounds that a reasonable employee would understand that rule as only applying to unauthorized breaks.

Employment at Will: Most employers include language in their offer letters and/or employee handbooks stating that employment is “at-will," meaning that either party can terminate employment at any time for any reason (so long as the reason is not discriminatory or otherwise unlawful). Several decisions signal a need for employers to carefully review these provisions. In American Red Cross Arizona, an NLRB ALJ found unlawful an at-will acknowledgement stating that “the at-will employment relationship cannot be amended, modified or altered in any way.” The ALJ ruled that such language violates the NLRA because employees could reasonably understand it to limit their ability to alter the at-will arrangement through collective bargaining or other concerted activity. Likewise, in February 2012, the General Counsel’s Office filed an unfair labor practice charge against a hotel chain in which it alleged that the at-will disclaimer in the company’s employee handbook violated Section 8(a)(1) of the Act to the extent it required employees to acknowledge that their at-will employment status could not be altered except by a writing signed by management. The case settled before hearing.

More recently, however, in Rocha Transportation, the General Counsel declined to issue a complaint against an employer whose at-will statement provided that its "at-will" provision could be modified only in writing signed by the employer's president. In addition, on October 31, 2012, in SWH Corporation, the General Counsel found that an at-will provision stating that no representative of the company had authority to enter into an agreement contrary to the "employment at will" relationship could not be reasonably interpreted to restrict an employee's Section 7 rights. Employers should continue to monitor developments in this area.

Employer Access to Courts: This year, the NLRB issued a supplemental decision in Federal Security holding that employees who file fraudulent or maliciously false unfair labor practice charges are engaged in protected activity under Section 8(a)(1) or (4) of the NLRA. Consequently, any state court lawsuit for malicious prosecution or abuse of process is preempted. Until the courts weigh in, employers considering whether to seek redress in the state courts should proceed cautiously.


How these decisions will fare in the Courts of Appeals remains to be seen. In the meantime, employers who have not updated their employee handbooks in recent years should do so now. It is clear from the NLRB's decisions in 2012 that the precise wording of employer policies and work rules can make all the difference when it comes to assessing their validity under the NLRA. Accordingly, employers should choose their language carefully and consult with someone well versed in labor law to ensure their policies and practices comply with the NLRA.