On May 19th, an NLRB administrative law judge (“ALJ”) found that a Hooters franchise located in Ontario, California unlawfully fired a waitress after she complained about a bikini contest run by the restaurant. The ALJ also held that Hooters maintained unlawful rules in its employee handbook, and that it unlawfully maintained an arbitration agreement that required employees to waive the right to bring class claims.

The Firing

During a conversation with a regional manager a few days before the bikini contest, the Charging Party raised concerns that managers had recently made unprofessional comments about various waitresses (i.e., that they were “getting fat,” were “dumb,” and were “divas”), and she also expressed that she was not looking forward to the bikini contest because it was “rigged” and the girls were forced to participate without being paid. She and some of her coworkers had previously discussed these concerns among themselves.

On the day of the contest, two of the Charging Party’s coworkers had a verbal altercation with each other in which the Charging Party was only tangentially involved. The Charging Party was subsequently terminated for the stated reason that she had been involved in the altercation.

The ALJ found that the Charging Party’s discharge was motivated by her protected concerted activity (i.e., her complaints to the regional manager the previous week) and that the discharge was therefore unlawful. In reaching this conclusion, the ALJ noted that the employer had failed to conduct a thorough investigation before concluding that the Charging Party had been involved in the altercation. The ALJ also noted that the employer’s stated reasons for the Charging Party’s discharge had shifted over time. The ALJ held that the Charging Party was entitled to backpay and reinstatement, among other remedies.

The Handbook Rules and the Arbitration Agreement

The ALJ also found that nine rules in the employee handbook interfered with employees’ Section 7 rights to engage in protected concerted activity and were therefore unlawful. Among some of the rules found unlawful were the following:

  • NEVER discuss tips with other employees or guests. Employees who do so are subject to discipline up to and including termination.
  • Insubordination to a manager or lack of respect and cooperation with fellow employees or guests may result in discipline up to and including termination.
  • Disrespect to our guests including discussing tips, profanity or negative comments or actions may result in discipline up to and including termination.
  • The unauthorized dispersal of sensitive Company operating materials or information to any unauthorized person or party may result in discipline up to and including termination. This includes, but is not limited to, recipes, policies, procedures, financial information, manuals or any other information in part or in whole as contained in any Company records.
  • Be respectful to the Company, other employees, customers, partners, and competitors. Refrain from posting offensive language or pictures that can be viewed by coworkers and clients. Refrain from posting negative comments about Hooters or coworkers. In all cases, NEVER publish any information regarding a coworker or customer.
  • Any other action or activity that the Company reasonably believes represents a threat to the smooth operation, goodwill or profitability of its business may result in discipline up to and including termination.

Finally, citing the Board’s controversial D.R. Horton decision, the ALJ found unlawful the employer’s arbitration agreement that required employees to give up the right to pursue employment-related claims on a class or collective basis.

Concluding Thoughts

The decision underscores the risks involved in terminating employees (union or non-union) who have recently engaged in what might later be found to have been protected concerted activity (i.e., employees who complain about working conditions). Even if the real reason for termination has nothing to do with the employees’ complaints, employers could nonetheless find themselves (and their handbooks and work rules) in litigation before the NLRB.