Why it matters

Continuing its crackdown on employee handbooks, a divided National Labor Relations Board (NLRB) ruled that an employer's rules against "insubordination or other disrespectful conduct" and "boisterous or other disruptive activity in the workplace" violated the National Labor Relations Act (NLRA). Concerned that an absent coworker might be fired, an inspector called the coworker at home to warn him. The coworker responded with a complaint to management that the inspector should not have called him and the inspector was terminated for violating a rule found in the employee handbook prohibiting "insubordination or other disrespectful conduct" and "boisterous or other disruptive activity in the workplace." He then filed a charge with the NLRB. An administrative law judge first determined that the phone call constituted protected concerted activity and then found the handbook rule to be overbroad, striking it down. The entire NLRB agreed that the inspector's termination violated the NLRA, but the panel split on the validity of the rules. While the majority found the rules ran afoul of the statute, a dissenting member disagreed, pushing instead to create a balancing test for workplace rules that takes into account the legitimate justifications associated with the disputed rules and any potentially adverse impact on NLRA-protected activity.

Detailed discussion

Missouri-based Component Bar Products manufactures and sells precision machined products for the automotive and other industries. James Stout worked as a roving parts inspector at the manufacturing facility, where Shawn Burgess worked the night shift.

One day in January 2015, Stout noticed that Burgess was not at work and asked a supervisor what was going on. The supervisor replied, "He doesn't work here anymore." Concerned that Burgess was going to get fired, Stout called his coworker on his cellphone and said, "I don't think you have a job and [the supervisor's] upset with you." Burgess hung up on Stout and called the company to say he did not appreciate that a fellow employee called to tell him he was fired.

Both Stout and Burgess were terminated later that day. Burgess was fired for his absence, while the employer determined that Stout would be discharged for violating the personal conduct and disciplinary action policy found in the company's handbook. Among other rules, the handbook prohibited "insubordination or other disrespectful conduct" and "boisterous or disruptive activity in the workplace."

Stout filed a charge with the NLRB. An administrative law judge (ALJ) ruled Component Bar Product's handbook rules violated Section 8(a)(1) of the NLRA because employees could reasonably construe the prohibitions to include protected Section 7 activity. Stout's phone call to Burgess was protected concerted activity under the NLRA, the ALJ said, so his termination also violated the statute.

The employer appealed and a divided panel of the NLRB upheld the ALJ's order.

First, the panel ruled that the ALJ applied the correct standard—that an employee could reasonably construe the handbook rules to include protected Section 7 activity—to find that the rules violated the NLRA. Secondly, the panel agreed that Stout engaged in protected concerted activity when he called Burgess and that the employer violated Section 8(a)(1) for terminating him based on this activity.

"Stout called his coworker to warn him that his job was in danger and to try to help him retain his employment," the NLRB wrote. "By his actions, Stout sought to join together with his coworker to help him avoid an adverse employment action and thus engaged in concerted activity."

The panel ordered the employer to stop maintaining and enforcing the challenged handbook rules, offer Stout full reinstatement, and make him whole for any loss of earnings.

While the panel unanimously affirmed the ALJ's ruling that Stout's termination violated the NLRA, one of the three members dissented with regard to the legality of the handbook rules. The "reasonably construe" test used by the ALJ and the panel majority should be repudiated, Philip A. Miscimarra argued, and replaced with a balancing test "that takes into account (i) the legitimate justifications associated with the disputed rules and (ii) any potential adverse impact on NLRA-protected activity."

"Facially neutral" employer rules—those that do not expressly restrict Section 7 activity, were not adopted in response to NLRA-protected activity, and have not been applied to restrict NLRA-protected activity—should not be declared unlawful "only if the legitimate justifications an employer may have for maintaining the rule are outweighed by its potential adverse impact on Section 7 activity," Miscimarra wrote.

To read the decision and order in Component Bar Products, Inc., click here.