In a case which typifies the NLRB’s aggressive attitudes towards employers, an NLRB judge invalidated a slew of employer internal policies, a nondisclosure agreement and an arbitration agreement.

In Hooters of Ontario Mills (5/19/14), the NLRB found that a Hooters franchise unlawfully fired a waitress after she complained about an allegedly rigged bikini contest. In doing so, the administrative law judge (“ALJ”) invalidated nine of Hooters’ internal handbook policies. Among the invalidated policies were prohibitions against (1) staff discussion of tips with other workers and guests, (2) insubordination, (3) unauthorized dispersal of sensitive company material, (4) conduct affecting the company’s smooth operation, and (5) disrespect to the company and its employees, which forbid employees from posting negative comments about the company and information about a coworker. The judge found these policies to be overly broad and reasonably likely to encroach upon the employees’ ability to engage in “protected concerted activity” under the NLRA. The judge ruled that the plaintiff’s complaints of unfairness in the bikini contest were “protected concerted activity” under the NLRA since there was a $300 prize awarded to the winner. The invalidation of these policies exemplifies the NLRB’s hypercritical treatment of employer policies, a trend we touched upon in April’s NLRB Finds Policy Banning “Negativity” Unlawful.

The ALJ also struck down Hooters’ mandatory arbitration agreement that waived the right to bring class claims, applying the NLRB’s controversial D.R. Horton decision holding that such agreements violate the NLRA. As we previously discussed in NLRB Continues to Eschew Wave of Decisions Approving Employee Arbitration Agreements with Class Action Waivers, despite the fact that numerous federal courts have rejectedD.R. Horton, it appears that the NLRB will stand by their decision until the Supreme Court overturns it.

This case is a strong reminder to employers of the importance of involving counsel in the oversight of their employment policies and development of handbooks. Employers must be sure to revise their employer handbooks and policies to ensure that there are no prohibitions on what could be considered “protected concerted activity” by the NLRB.