What's an employer to do when employees publicly criticize its products and/or services in consumer-facing forums, such as social media? While most employers assume that they have unfettered discretion to punish disloyal employees, a Jimmy John's franchisee, MikLin Enterprises (MikLin), recently learned the hard way that its ability to punish—let alone put a stop to—such conduct is more limited than it realized.

In March 2016, the Eighth Circuit affirmed a National Labor Relations Board (NLRB) decision against MikLin, finding that the company committed an unfair labor practice by terminating employees responsible for posting signs near entrances and on bulletin boards in its restaurants that included photos of its sandwiches with captions stating that they may have been made by "sick employees." MikLin Enters. v. NLRB, 2016 U.S. App. LEXIS 5586 (8th Cir. Mar. 25, 2016).

The decision, which calls into question an employer's ability to act when faced with public criticism of its products by employees, turned on the determination that the posters claiming employees weren't allowed to call in sick were not "maliciously false" enough, given the employer's very strictly worded policy preventing call-offs without replacements.

So, how did we get here? Recognizing an employer's legitimate interest in preventing disparagement of its products by its own employees, the U.S. Supreme Court held in NLRB v. Electrical Workers Local 1229, 346 U.S. 464 (1953) (Jefferson Standard), that "product disparagement unconnected to the labor dispute, breach of important confidences, and threats of violence are clearly unreasonable ways to pursue…labor dispute[s]."

Since Jefferson Standard, however, the NLRB has found the following statements and acts, particularly when tied to a labor dispute, to be protected speech and/or conduct:

An airline mechanic sent a letter to an employer's customers, commercial airlines, informing them of lax safety practices. Allied Aviation Serv. Co. of N.J., Inc., 248 NLRB 229, enforced mem., 636 F.2d 1210 (3d Cir. 1980).

Housekeeping employees sent letters to clients stating that the quality of cleaning was "deteriorating" because their employer was diluting cleaning products and the building was not actually really being cleaned. Prof'l Porter & Window Cleaning Co., 263 NLRB 136, 139 (1982), enforced mem., 742 F.2d 1438 (2d Cir. 1983).

An employee told the company's client, a general contractor, that his employer, a subcontractor, never paid its bills, was "no damn good," and could not finish the job. Emarco, Inc., 284 NLRB 91 (1987).

A group of employees accused their employer on local, live television of instructing employees to lie to customers. MasTec Advanced Tech., 357 NLRB 17 (2011).

In each of these cases, the NLRB found the discipline imposed by the employer constituted an unfair labor practice, primarily because the statements at issue were made in the context of a labor dispute and were either not so "either maliciously untrue" or not "intended to undermine [the employer's] reputation" so as to warrant a loss of protection by the Act.

Before taking action against employees who are publicly criticizing your company's products or services—by posting negative comments to social media sites or on actual bulletin boards as in the case of MikLin Enterprises—employers should pause and, whenever possible, consult legal counsel. Before disciplining or discharging anyone, consider the following:

  • Is there an ongoing labor dispute in your workforce?

If the comments are made in the midst of, or in the wake of, a labor dispute, the NLRB may be more likely to find the speech protected by the Act.

  • Is anything the employees are saying true?

In MikLin, the Eighth Circuit agreed that, because the posters in question had shreds of truth regarding very strict call-off policies, the comments were not “maliciously false” enough to lose protection of the Act.

  • Are the comments tied to the employee's working conditions, such as employee leave, hours, pay, etc.?

Comments directed solely toward product quality, without reference toward working conditions, are less likely to be considered protected. In 2007, the NLRB upheld an employer's decision not to hire several individuals who published disparaging letters about the company, unrelated to a labor dispute or any relevant working conditions, while finding it to be an unfair labor practice that the company chose not to hire other activists who referenced relevant labor disputes and conditions of employment in similar letters. Five Star Transp., 349 NLRB 42, 45 (2007).

In sum, if the criticism of your products or services is in any way related to the company's treatment of its employees, it's best to think twice before moving forward. When in doubt, contact a Vedder Price attorney to identify any risks associated with your planned course of action.