Following closely after the NLRB's first social media decision in Costco Wholesale Corporation (NLRB Case No. 34-CA-012421) just weeks ago, an ALJ for the Board has issued a mammoth 43 page decision in EchoStar Technologies (NLRB Case No. 27-CA-066726) striking down numerous employer policies that in his opinion unlawfully chilled employees' rights to engage in protected concerted activity.
This post takes a look at the policies challenged in the EchoStar decision and summarizes where employers stand now. To understand the NLRB's recent decision in EchoStar, it is important to first understand where the NLRB is coming from. When reviewing employer policies, whether they be social media related or not, the Board and its ALJs focus on whether the challenged policy would reasonably tend to "chill" employees in their Section 7 rights, which include the right to discuss and complain about their issues such as wages, hours, and working conditions with other employees and to disclose, discuss and complain about those matters to labor organizations and to the public. Whether a particular employer policy would "reasonably tend to chill employees" in their exercise of their Section 7 rights is judged objectively by whether it is likely to have a chilling effect on Section 7 rights, even if the employer has never even enforced the policy. Keeping this background in mind, let's go through each of the employer policies that were at issue in EchoStar to see where the ALJ came out and why.
Challenged Policy No. 1 - Non-Disparagement and Non-Defamation Policy
You may not make disparaging or defamatory comments about EchoStar, its employees, officers, directors, vendors, customers, partners, affiliates, or our, or their, products/services. Remember to use good judgment.
EchoStar: Unlawful. The ALJ found that a reasonable employee would read the prohibited action "disparaging" to intrude on protected conduct and struck down the policy in full. In essence, the ALJ accepted the NLRB General Counsel's argument that handbook’s “blanket” prohibition of employee “disparaging comments” … “fails to make exception for statements and comments that, although critical or harsh, may enjoy the ’[NLRA]’s protection”. This is consistent with the Costco decision where the Board struck down a broad prohibition against making statements that “damage the Company, defame any individual or damage any person’s reputation”. The ALJ, however, expressed that a policy could prohibit "malicious gossip" or "malicious statements."
Challenged Policy No. 2 - Use of Social Media on Company Equipment or Company Time
Unless you are specifically authorized to do so, you may not: Participate in these activities [social media] with EchoStar resources and/or on Company time.
EchoStar: Unlawful. Although the ALJ did not detail his reasons for striking down this policy, the General Counsel argued that the Handbook did not define what was considered "Company time" as opposed to "working time and there was no indication that any lawful limits were ever communicated to employees. Taking this cue, had the policy prohibited employees from engaging in social media activities during "working time" and narrowly defined working time in the context of their employment with EchoStar, the policy might have survived the ALJ's scrutiny.
Challenged Policy No. 3 – Employee Contact with the Media
- The policy at issue required employees to do the following:
- Receive prior authorization to correspond, with members of the media or press regarding the Company or its business activities;
- Direct inquiries to the Company's communications department;
- Obtain written authorization from Company's communications department before engaging in public communication regarding the Company or its business activities;
The following conduct was prohibited:
- All public communications, including contact with media and members of the press, including print, broadcast and their electronic versions and associated websites and blogs.
- Presentations, speeches or appearances, including conference, seminars, company publications, advertising, video releases, opinion articles, advertisements, etc., regarding the Company by the Company's business partners or any third parties including consultants.
EchoStar: Unlawful. The ALJ reviewed the policy as a whole, found that a reasonable employee reading it would not read it as limiting only official employee contact with the media to those employees with authority to do so, and struck down the entire policy. Given the way the ALJ structured his conclusion, it would appear that a stark prohibition of communication with the media by employees would be deemed impermissible. It would not be impermissible, however, to prohibit employees from speaking on behalf of the Company without first obtaining authority prior to the employee's purported official conduct. Because the policy as written confused to the two distinctions, the ALJ struck it down.
Challenged Policy No. 4 – Employee Discussions Regarding Confidential Information
... You must not discuss it with or disclose it to outsiders without the prior written authorization of duly authorized Company personnel, both during and after employment with the Company. Similarly, you are responsible for the internal security of confidential information; you must not discuss it with or disclose it to another employee unless he or she has a specific need to know and only when you are authorized to discuss or disclose it....
EchoStar: Lawful. The General Counsel took issue with this policy because it included "employee information" in the list of proprietary information EchoStar considered confidential and subject to the policy. The NLRB reviewed the challenged portion of the policy within the context of the policy as a whole, which used the phrase in a larger definition of "confidential information", which also included trade secrets, satellite technology, customer lists, vendor lists, pricing lists, computer systems technology, sales and profit data, and strategic business plans". Relying on another case that had used the term "employer information" among a list of things that constituted confidential intellectual property where the policy was upheld, the ALJ concluded that a reasonable employee would reasonably understand that the policy was designed to protect the confidentiality of the Company's proprietary business information rather than to prohibit discussion of employee wages or other topics protected under Section 7.
Challenged Policy No. 5 – Employee Contact with Government Agencies
The [Company's] General Counsel must be notified immediately of any communication involving federal, state or local agencies that contact any employee concerning the Company and/or relating to matters outside the scope of normal job duties....Do not engage in any further discussion. An employee cannot be required to provide information, and any response may be forthcoming after the General County has reviewed the situation.
EchoStar: Lawful. The General Counsel argued that the policy limits an employee's ability to participate in the Board's processes and would also be read to limit an employee's ability to concertedly seek the assistance of other government agencies to improve working conditions and that employees are not at liberty to independently discuss the Company or its business with any government agent. The ALJ disagreed and found that the rule made it obvious to a reasonable employee that the limitations apply only to official contacts directed to the Company and not to the employee as an individual with individual information or questions.
Challenged Policy No. 6 – Employer's Right to Request that Investigations Remain Confidential
[With respect to Company investigations] ... You are also expected to maintain confidentiality....
EchoStar: Unlawful. Here, the General Counsel argued that the confidentiality policy contained no limiting language and appeared to apply to all investigations and to all employees, whether the employee herself was under investigation, cooperating with the investigation, or merely became aware of the investigation. The General Counsel also took issue with the lack of any temporal restriction in the policy, which could mean the policy applied equally to ongoing and closed investigations. Although the Company argued that employers need confidentiality in their investigation to be able to conduct a fair and unbiased investigation into matters, the ALJ concluded that the need for confidentiality needed to be determined on a case by case basis after balancing the need for confidentiality against the employees' rights to discuss terms and conditions of employment. Relevant factors according to the ALJ included,
"whether in any given investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up. Only if the [Company] determines that such a corruption of its investigation would likely occur without confidentiality is the [Company] then free to prohibit its employees from discussing these matters among themselves."
Challenged Policy No. 7 – Disciplinary Actions
Not unlike many employers, EchoStar included in its Handbook, a list of examples of conduct that were unacceptable and subject to disciplinary action including, among many other things like possessing, distributions, sale or use of illegal drugs on Company premises:
Insubordination (The refusal to follow a reasonable work directive or undermining the Company, management or employees).
EchoStar: Unlawful. The problem in this rule was one not with the inclusion of "insubordination" as grounds for termination; the problem was with the parenthetical that followed, specifically the "undermining" part. The General Counsel argued that this statement was vague and might include conduct that employee might engage in to improve their working conditions, but that have the effect of undermining the Company's interest, e.g., striking, picketing, etc. The ALJ agreed and struck down the policy on what appears to be based the use of the phrase "undermining the Company, management or employees." Had EchoStar not included the parenthetical, specifically the "undermining part, the policy likely would have survived the Board's scrutiny.
"Should you have questions about the Handbook, please contact the Human Resources Department."
“One or more of the policies set forth in this Handbook may be affected by the application of law. Should a conflict arise between an EchoStar policy and the law, the appropriate law shall be applied and interpreted so as to make the policy lawful in that particular jurisdiction.”
EchoStar: Ineffective. The ALJ held that the Company's savings clauses did not in fact "save" " any of the policies he concluded to be unlawful, stating (1) the employee should not be required to "voice his or her fears and trepidations" to human resources if they have questions about a policy's possible reach and (2) a general clause asserting that a policy should be applied and interpreted does not "save" an otherwise invalid rule. So, for those of you keeping score, 5 of the 7 policies challenged in the EchoStar case were found unlawful and the Savings Clause struck down. For those who like charts like I do, here is what survived under both EchoStar and Costco, which we reported on here, and what did not:
Click here to see table