In what is seemingly becoming an annual tradition, the National Labor Relations Board (the “Board” or the “NLRB”) wrapped up the year with a number of significant pronouncements. Among these actions were rulings narrowing employees’ rights to use employer email systems, expanding employers’ rights to insist on confidentiality during internal investigations, permitting employers to cease the collection of union dues following expiration of collective bargaining agreements and to restrict wearing of union insignia, and limiting the circumstances in which the Board can revisit decisions made by arbitrators. Additionally, the Board finalized the first of what is anticipated to be a number of amendments to its procedures concerning the conduct of union elections. This update summarizes these important developments.
The Board Abandons Rule Allowing Use of Employer Email Systems for Union Activity
In Caesars Entertainment d/b/a Rio All-Suites Hotel & Casino, 368 NLRB No. 143 (Dec. 16, 2019), the Board held that employees have no statutory right to use employer information technology equipment, such as e-mail, for organizing or other purposes protected by Section 7 of the National Labor Relations Act (the “NLRA” or the “Act”). In doing so, the Board returned to the standard announced in its 2007 decision in Guard Publishing Co. d/b/a Register Guard, 351 NLRB 1110 (2007), and overruled its 2014 decision in Purple Communications, Inc., 361 NLRB 1050 (2014). In Purple Communications, the Board held that if an employer provides an employee access to the employer’s e-mail system, the employee must be permitted to use that e-mail system in furtherance of his or her Section 7 rights during nonworking time, unless the employer could show special circumstances.
The Board’s recent pronouncement in Caesars Entertainment involved a challenge to several handbook rules maintained by Rio All-Suites Hotel and Casino in Las Vegas. The handbook provided that computer resources may not be used to, among other things, “[s]end chain letters or other forms of non-business information” or “[s]olicit for personal gain or advancement of personal views.” The majority of the Board, consisting of Chairman Ring and Members Kaplan and Emanuel, announced its return to the Register Guard standard and held that these work rules were permissible under that standard. The majority focused on balancing the employer’s property interests against employees’ organizational rights, concluding that the standard announced in Register Guard reached the proper balance of these potentially competing interests. The majority concluded that the standard announced in Caesars Entertainment should be applied on a retroactive basis. Member McFerran dissented, believing that Purple Communications articulated the correct standard.
While the Board’s decision in Caesars Entertainment is certainly welcome news for employers, it does not give employers carte blanche when it comes to its information technology resources. An employer’s facially neutral restriction on the use of its information technology resources by employees may be found unlawful in two circumstances. First, the Board recognized that there may be some cases where employees may have the right to use an employer’s e-mail system for Section 7-protected communications if e-mail is the only reasonable means for employees to communicate with one another. The Board, however, cautioned that this exception would not apply in a typical workplace, but would be an unusual occurrence that must be decided on a case-by-case basis. The Board stressed that such a circumstance would be “rare” and went further to note that it was not deciding whether this exception would apply to information technology resources other than an e-mail system. Second, the Board reiterated that even facially neutral rules cannot be applied in a discriminatory manner.
Following this decision, employers should review their information technology rules and may determine to restrict the use of their systems for business use only. While these rules may be presumptively valid under the Board’s standard, employers must be cautious to not turn a blind eye to certain non-business use of their systems while prohibiting Section 7-protected activity.
Employers May Insist on Confidentiality During Internal Investigations
In Banner Estrella Medical Center, 362 NLRB 1108 (2015), the Board ruled that because employees have a right under Section 7 of the NLRA to discuss “discipline or ongoing disciplinary investigations,” an employer may prohibit employees from discussing such investigations “only where the employer shows that it has a legitimate and substantial business justification that outweighs employees’ Section 7 rights.” Under this standard, the burden of showing the need for confidentiality was placed on the employer and could be met only by showing that “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.”
In Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (Dec. 17, 2019), a majority of the Board overruled Banner Health and ruled that employer confidentiality rules that by their terms apply only for the term of an internal investigation are presumptively lawful to maintain. According to the majority, the Board in Banner Health “abandoned its obligation to balance employee and employer interests.” In particular, the majority stated, the standard was one in which “Section 7 rights predominate, and the employer’s interests are not even considered unless and until the employer demonstrates [circumstances warranting confidentiality].” Further, “the majority in Banner Estrella failed to recognize and weigh the important interests of employers in providing, and their employees in receiving, assurances that reports of incidents of misconduct or other workplace dangers will be held in the strictest confidence by all concerned….”
Given these considerations, the Board held, investigative confidentiality rules, like other employer rules, should be analyzed under the tripartite framework announced in Boeing Co., 365 NLRB No. 154 (2017). Under this framework, because “the justifications associated with investigative confidentiality rules applicable to open investigations will predictably outweigh the comparatively slight potential of such rules to interfere with Section 7 rights,” such rules are properly considered under Boeing “Category 1,” and are therefore presumptively lawful. The Board did, however, conclude that rules that do not apply only to open investigations are “Category 2” rules under the Board’s Boeing framework and require “individualized scrutiny in each case as to whether a post-investigation adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.”
Turning to the specific rules at issue in Apogee, the Board found that because the employer’s rules were not facially limited to open investigations, they warranted individual scrutiny. The rules were permissible, however, since they “do not broadly prohibit employees from discussing either discipline or incidents that could result in discipline.” Accordingly, any impact on Section 7 rights was “relatively slight.”
Member McFerran dissented from the decision, arguing that the Board’s “break with precedent is radical,” and effectively holds that “all employer imposed investigative confidentiality rules are ‘lawful to maintain,’ whether or not the employer offers (much less provides) any justification for them so long as they are limited to the duration of the investigation.” This approach, McFerran asserted, was unwarranted since it “largely ignores the chilling effect of confidentiality rules on employees.”
Employers May Cease Checking Off Dues Following Contract Expiration
In Valley Hospital Medical Center, 368 NLRB No. 139 (2019), the Board considered whether an employer is required to continue to remit dues to a labor organization pursuant to a dues checkoff clause following expiration of the collective bargaining agreement. For over half a century, the Board had held that there was no such obligation. In 2015, however, the Board overturned this past precedent in Lincoln Lutheran of Racine, 362 NLRB 1655 (2015). The Board’s recent Valley Hospital expressly overruled Lincoln Lutheran, and did so on a retroactive basis.
The facts in Valley Hospital were straightforward and presented to the Board on a stipulated record. Valley Hospital and the Local Joint Executive Board of Las Vegas were parties to a collective bargaining agreement that expired on December 31, 2016. The collective bargaining agreement contained a standard dues checkoff clause that required the employer to deduct dues from those employees’ pay who had submitted authorization forms, and remit the dues directly to the union. On February 1, 2018, about 13 months after the expiration of the collective bargaining agreement, Valley Hospital unilaterally ceased deducting and remitting dues to the union. The union filed an unfair labor practice charge challenging this action.
The Board majority (Chairman Ring and Members Kaplan and Emanuel) explained that employers are generally required under the Katz doctrine, NLRB v. Katz, 369 U.S. 736 (1962), to maintain the status quo by adhering to mandatory terms and conditions of employment upon contract expiration, at least until a valid bargaining impasse has been reached. However, there are several well-established exceptions to this requirement. Those exceptions include contract provisions imposing no-strike/no-lockout obligations, arbitration clauses, and management rights clauses. Another exception that has now been reinstated in Valley Hospital is for union security and dues checkoff obligations. These exceptions exist because the clauses excepted from the requirements of Katz involve obligations that depend on the existence of a contract for their enforcement and would not exist absent a specific contractual authorization. Once the contract expires, those obligations are no longer enforceable.
In overruling Lincoln Lutheran, the Board majority recognized that the “paramount and clearly intended purpose of the holding in that case is to exclude the cessation of dues checkoff from the arsenal of economic weapons that an employer may legitimately use as leverage in support of its bargaining position.” Such a rule is inappropriate, the majority held, because it interferes with the NLRA’s statutory bargaining scheme, which considers such weapons to be part and parcel of the bargaining process and reserves their use to the parties.
Member McFerran, dissenting, would have adhered to the Lincoln Lutheran ruling. In her view, employers should not be permitted to make unilateral changes to mandatory subjects of bargaining, such as dues checkoff clauses. According to Member McFerran, permitting this undermines the status of the union as bargaining representative and interferes with “the union’s ability to focus on bargaining, rather than on shoring up its financial support.”
Arbitral Decisions Concerning Unfair Labor Practices Warrant Increased Deference
In United Parcel Service, Inc., 369 NLRB No. 1 (Dec. 23, 2019), a unanimous Board panel overruled an Obama-era decision broadening the circumstances in which the Board could revisit the merits of unfair labor practice allegations that had previously been addressed in arbitration. In Babcock & Wilcox Construction Co., Inc., 361 NLRB 1127 (2014), the Board narrowed the circumstances in which arbitral decisions would preclude the Board’s subsequent evaluation of an unfair labor practice charge arising from the same conduct. Under this standard, deferral to an arbitrator’s decision is appropriate only where: 1) the party urging deferral “demonstrates that the specific statutory right at issue was incorporated in the collective-bargaining agreement” or that “the parties explicitly authorized the arbitrator to decide the statutory issue presented in the particular case”; 2) the arbitrator actually considered the unfair labor practice at issue or the party opposing deferral affirmatively presented the statutory issue from being presented in arbitration; and 3) “the arbitrator’s decision constitute[d] a reasonable applicable of the statutory principles that would govern the Board’s decision.” In addition to redefining the post-arbitral deferral standards, the Board in Babcock & Wilcox, also revised the standards in which the Board would approve pre-arbitral deferral, holding that deferral would only be authorized where “the arbitrator was explicitly authorized to decide the unfair labor practice issue.”
Finding that Babcock & Wilcox was inconsistent with the NLRA’s policy of encouraging “peaceful resolution of employment disputes about discharge and discipline issues through collectively bargained arbitration proceedings,” the Board in United Parcel Service restored a governing standard that permits more frequent deferral. Specifically, the Board reinstituted the standards of Olin Corp., 268 NLRB 573 (1984), and Spielberg Mfg. Co., 112 NLRB 1080 (1995). Under these standards, the Board will defer to an arbitration award if: 1) the arbitration proceedings were “fair and regular”; 2) the parties agreed to be bound by the decision; 3) the contractual issue was “factually parallel” to the unfair labor practice issue; 4) “the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice"; and 5) the decision was not “clearly repugnant” to the purposes and policies of the NLRA. The Board further announced that it would “reinstate the corollary standards for prearbitral deferral to grievance arbitration...and for deferral to prearbitral grievance arbitration agreements….”
Facially Neutral Insignia Rules Should Be Evaluated Pursuant to the Boeing Framework
In Wal-Mart-Stores, Inc., 368 NLRB No. 146 (Dec. 16, 2019), the Board examined the permissibility of an employer’s rule limiting employees’ wearing of union insignia in the workplace. In a 3-1 decision, the Board held that Wal-Mart’s policy limiting employees to wearing “small, non-distracting logos or graphics” in work areas was permissible under the framework established in Boeing Co. According to the majority, “limitations on the display of union insignia short of outright prohibitions…warrant individualized scrutiny in each case as Boeing category 2 rules.” Applying this framework to Wal-Mart’s rules, the Board held that the impact of the rules on employees’ rights was “relatively minor” and was outweighed by the company’s interest in “providing its customers with a satisfactory shopping experience by making store employees readily identifiable to customers and protecting its merchandize from theft and vandalism.” Member McFerran dissented, asserting that the Board’s application of the standard from the “deeply flawed” Boeing decision created a presumption that employers are permitted to restrict the wearing of union insignia based on “any legitimate justification.”
Board Issues Final Rule Revising Election Procedures
Among the changes that many practitioners have anticipated from the current Board is the abandonment of the so-called “ambush election” rules adopted by the Board during the Obama administration. On December 13, 2019, the Board issued regulations revising several significant provisions of the rules governing union elections. These changes will become effective in early April 2020.
While the changes do not revise the regulations wholesale, they restore several employer-friendly aspects of the rules. These changes include:
- Extension of the period during which a pre-election hearing must be held from eight calendar days to fourteen business days;
- Extension of the period during which nonpetitioning parties may file statements of position from seven calendar days to eight business days;
- Requiring petitioners, in addition to respondents, to file a statement of position identifying issues to be addressed at the pre-election hearing;
- Allowing disputes concerning unit scope and voter eligibility, including supervisor status, to be addressed at the pre-election hearing. Under the prior rules, the only issues that could be addressed at the pre-election hearing were those concerning whether a valid question concerning representation existed. Issues concerning the scope of the unit could only be raised by challenging an individual employee’s vote during the election;
- Post-hearing briefing is permitted with respect to both pre- and post-election hearings;
- Elections will not be conducted prior to the 20th business day following the issuance of a direction of election;
- A request for review of the direction of election may be filed within ten days of the direction and, if the request is not decided prior to the election, disputed ballots will be impounded; and
- Regional directors may not certify the results of an election while a request for review is pending or before the time for requesting review has expired.
In addition to the new rules, the Board announced on December 5 that it was extending the period for comment concerning proposed rules relating to a number of significant aspects of the Board’s election procedures, including the handling of so-called blocking charges and the application of the voluntary recognition bar doctrine. Pursuant to the Board’s order, comments concerning the changes may be submitted until January 23, 2020.