The National Labor Relations Board (NLRB) continued its pro-labor agenda in 2013, issuing decisions generally viewed as highly favorable to organized labor on a wide variety of topics, including confidentiality policies, workplace access rules, social media, and appropriate bargaining units.
The NLRB's initiatives, however, did not fare well in the federal appellate and district courts. The D.C. and Fourth Circuits struck down the NLRB's rule requiring private sector employers to post a notice advising employees of their rights under the National Labor Relations Act; the D.C. Circuit stayed the NLRB's rule to speed up representation elections on the grounds that it was improperly adopted; and numerous courts rejected the NLRB's decision in D.R. Horton Inc. holding that class action waivers violate federal labor law. In August 2013, a federal district court denied the NLRB's petition for an injunction, holding that the outgoing Acting General Counsel Lafe Solomon's appointment was invalid. Even NLRB Administrative Law Judges declined to follow the NLRB's lead. For example, an ALJ recently rejected an NLRB General Counsel’s claim that employees had a legal right to record their co-workers and managers in the workplace. Another ALJ concluded that the NLRB's stance on class action waivers "cannot stand" based on recent Supreme Court's decisions.
At the same time, the NLRB remained mired in constitutional challenges to its authority. In January 2013, in Noel Canning v. NLRB, the D.C. Circuit Court of Appeals invalidated President Barack Obama's recess appointments of Richard Griffin, Sharon Block and Terence Flynn to the NLRB a year earlier. The court held that the Constitution only authorizes presidential appointments during intersession recesses, and that the president can only exercise his recess-appointment power to fill vacancies that arise during a recess. The Fourth and Third Circuits similarly held that the President's appointments did not comport with the Constitution's Recess Appointments Clause. In January 2014, the Supreme Court will hear oral argument in Noel Canning. If the decision stands, it could undo a year of NLRB decisions, as well as earlier decisions made during recess appointee Craig Becker's tenure.
While the NLRB's agenda was frustrated to some degree by the Courts of Appeals in 2013, the NLRB is now positioned to pursue its rule-making and aggressive case agenda in 2014. In August 2013, the Senate confirmed four new members nominated by President Barack Obama. In October 2013, the U.S. Senate approved President Obama's nomination of Richard Griffin - a former general counsel for the International Union of Operating Engineers - to serve as the NLRB's General Counsel. Accordingly, the NLRB now has a fully confirmed five-member board for the first time in a decade and a strong labor advocate ensconced as the General Counsel. Moreover, its current make-up means that the outcome of any case is unlikely to change in the event the NLRB has to reissue decisions based on the outcome of Noel Canning.
Going forward, employers can expect new compliance challenges and heightened enforcement as the NLRB continues to target non-unionized employer policies and broadly interpret Section 7 of the NLRA, which gives employees the right to, among other things, organize and engage in concerted activity to improve their pay and working conditions and for mutual aid or protection. Employers will need to decide whether to change their policies and practices in view of NLRB rulings or to risk unfair labor practice charges as the NLRB pursues its aggressive agenda.
Significant NLRB Decisions in 2013
- Employee Handbook Policies
The NLRB continued to pursue non-unionized employers for violating employees' Section 7 rights based on employee handbook policies, including confidentiality, internal investigations, social media restrictions, electronic communications, class action waivers, and workplace access rules.
- Confidentiality of Workplace Investigations
In its 2012 Banner Estrella Medical Center decision, the NLRB held that an employer violated Section 8(a)(1) of the NLRA by adopting a blanket confidentiality policy for internal workplace investigations. According to the NLRB, employers (union and non-union) have the burden of showing, on a case-by-case basis, that there is a legitimate business need for confidentiality that outweighs employees’ Section 7 rights. According to the NLRB, such proof could include a showing that, in a particular investigation, witnesses needed protection, evidence was in danger of being destroyed, testimony was in danger of being fabricated, or there was a need to prevent a cover up.
In April 2013, the NLRB's Division of Advice released a memorandum providing further guidance on the employer's burden. The General Counsel held that an employer’s confidentiality rule violated Section 8(a)(1) by prohibiting discussions about ongoing investigations into employee misconduct. In doing so, the Associate General Counsel proposed language that it would consider to be lawful:
[The employer] has a compelling interest in protecting the integrity of its investigations. In every investigation, [the employer] has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. [The employer] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [the employer] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.
See Verso Paper, NLRB Div. of Advice, No. 30-CA-89350, January 29, 2013.
More recently, in July 2013, an ALJ struck down two employer policies, one that "directed" employees not to discuss any investigation with other employees and a revised policy that "recommended" employees refrain from doing so. Based on Banner Estrella and the NLRB’s Advice Memorandum, the ALJ found that even the revised policy would have a reasonable tendency to chill employees from exercising their Section 7 rights because there was nothing assuring employees that they were free to disregard the company's request and choose to discuss the case. The ALJ further noted that there was no case-by-case review or balancing of the employer’s need for confidentiality against the employees’ rights under Section 7.
In view of DOJ and other federal agency compliance initiatives, EEOC enforcement guidance addressing confidentiality in workplace harassment investigations, as well as employers' strong interests in protecting the confidentiality of sensitive investigations, employers can expect to see new challenges to the NLRB's rulings in this area. In the meantime, employers should review their current policies related to investigations to determine whether the language tracks that of the approved language in the Advice Memorandum. In addition, to minimize legal risk, employers should consult with counsel before disciplining or terminating an employee for violating the confidentiality of an internal investigation.
- Confidentiality of Information
The NLRB continued to target confidential information policies designed to protect trade secret and proprietary business information and to safeguard privacy rights. In Design Technology Group LLC (April 19, 2013), the NLRB held that an employer violated the NLRA by maintaining a handbook rule that prohibited employees from disclosing wages or compensation to any third party or other employee.
In April 2013, the NLRB determined that a retail store violated the NLRA by maintaining several information security policies which warned employees (1) not to release confidential guest, employee or company information; (2) not to share confidential information unless someone has a need to know the information to do their job; (3) not to discuss confidential information in the breakroom, at home, or in any public area. Significantly, the company's policy did not define the term "confidential information," but stated that all "non-public company information" must be treated as confidential and provided examples (e.g., financial information, strategic plans, customer information, employee personnel records). According to the NLRB, these prohibitions necessarily restricted employees from sharing with other workers information regarding their wages, hours, and other terms and conditions of employment. In addition, the ALJ noted that by including the wording “personnel information” in the listing of confidential documents, the company required employees to speculate about what kind of information disclosure could trigger discipline, chilling their Section 7 rights.
Similarly, in June 2013, an NLRB judge struck down a policy that prohibited employees from disclosing confidential information relating to “personnel” and “employees.” The ALJ further found that the employer's disclaimer provision, which stated that the policy “does not deny any rights provided under the National Labor Relations Act to engage in concerted activity,” did not save the policy.
And in Quicken Loans, Inc. (June 21, 2013), the NLRB took issue with an employment agreement which required employees to maintain all proprietary/confidential information in confidence and not to disclose any information to any person, business or entity. The definition of confidential information included "personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses and email addresses." According to the ALJ, these restrictions curtailed employees' section 7 rights insofar as they would not be permitted to discuss "the wages and other benefits that they receive, the names, wages, benefits, addresses or telephone numbers of other employees."
In July 2013, however, an ALJ declined to find unlawful a policy which required employees "to safeguard and not disclose any knowledge, decision or any information" which could prejudice the company's interests or any confidential information to any party outside the company unless necessary to carry out its business properly. The policy contained an exception for disclosures required by law, subject to notifying the legal department prior to disclosure where possible. Noting that the NLRB's analysis of confidentiality policies typically turns upon whether or not they explicitly include employee or personnel information, the ALJ found that the policy was lawful. In doing so, the ALJ noted that the paragraph immediately preceding the disputed language affirmed the company's “substantial and legitimate interest in maintaining the confidentiality” of its intellectual property and that of its customers and suppliers. According to the ALJ, in this context, the disputed language would more reasonably be understood by employees as applying to intellectual property and other confidential business information and not to the terms and conditions of their employment.
Employers should ensure confidentiality policies avoid broad, general prohibitions and undefined terms that could be read to prohibit the discussion of wages, hours and other working conditions.
- Social Media
Section 7 of the NLRA limits an employer's right to restrict an employee from communicating via social media on issues such as wages, hours, benefits or other terms and conditions of employment. In 2013, the NLRB continued to strike down social media policies it deemed overbroad. For example, in Dish Network Corporation (2013), the NLRB adopted an ALJ's finding that an employer violated the NLRA by maintaining a social media rule that prohibited employees from "making disparaging or defamatory comments" about the company, its employees, officers, directors, customers, partners or its products and services. It also found unlawful provisions which prohibited employees from contacting the media, engaging in public communications regarding the company without written authorization, or engaging in discussions with government agencies.
Likewise, in Quicken Loans, Inc., the NLRB agreed with the ALJ's conclusion that a non-disparagement provision which stated that employees agreed not to "publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees" interfered with employees' Section 7 rights. The ALJ noted that employees are allowed to criticize (within certain limits) their employer and its products as part of their Section 7 rights and that they sometimes do so in appealing to the public, or their co-workers, to win their support.
When it comes to disciplining employees for social media posts, the NLRB continues to distinguish between comments that amount to “protected concerted activity” and "mere gripes" unrelated to group activity among employees. For example, in Design Technology Group LLC (April 19, 2013), the NLRB held that the employer unlawfully terminated three employees who posted messages on Facebook critical of a supervisor's response to their concerns about working late in an unsafe neighborhood. In contrast, in Tasker Healthcare Group, (May 8, 2013), the NLRB's Division of Advice concluded that an employee’s profanity-laced comments about the company and her supervisor in a private group message on Facebook in which she suggested that the employer could “FIRE ME … Make my day” constituted unprotected “boasting and griping.”
Given the significant risks around brand, confidentiality and privacy posed by rapid and global dissemination of tweets and posts, companies should carefully develop computer usage and social media policies to address these concerns while taking into account NLRB rulings. In addition, employers should proceed cautiously and consult with counsel before disciplining or terminating an employee based on his or her social media use.
- Workplace Access
The NLRB's 2013 rulings continued to narrow the circumstances under which an employer may limit off-duty employees' access to the workplace.
In Remington Lodging & Hospitality LLC (Apr. 24, 2013), the NLRB determined that a hotel violated the NLRA by maintaining workplace access rules that (1) prohibited employees from returning to the hotel before or after working hours without authorization and (2) required employees to stay in their working areas while on duty and not enter “other parts of the hotel, parking lots, or outside facilities without the permission of the immediate Department Head"; and (3) prohibited employees from distributing literature in “guest areas or work areas" or soliciting guests.
In another case, the NLRB affirmed an ALJ's finding that a retailer violated the NLRA by maintaining an "after hours" policy which provided that employees were required to leave the premises after hours and could only be on company property during their scheduled work hours or for other authorized company business. However, the NLRB overturned the ALJ's finding that the company's parking lot policy violated the Act by requiring employees to report unknown loiterers as part of a rule focused on protecting employee safety.
- Class Action Waivers in Arbitration Agreements
In January 2012, in In re D.R. Horton Inc., the NLRB held that the employer’s practice of requiring employees to sign an arbitration agreement that included a class action waiver as a condition of their continued employment violated the NLRA. Over the last year, federal appellate and district courts have largely rejected the NLRB's position. Most recently, on December 3, 2013, the Fifth Circuit concluded that the NLRB's D.R. Horton decision impermissibly conflicted with the Federal Arbitration Act (FAA). While the Fifth Circuit's decision is welcome news for employers, the NLRB is likely to continue to apply D.R. Horton (at least in the near term). This is because the NLRB follows a non-acquiescence policy, which means that it does not change its position just because it has been rejected by one (or even several) courts of appeals. Accordingly, employers may continue to see ALJ decisions in this area.
Over the last year, ALJs have gone both ways when it comes to applying D.R. Horton. In June 2013, a department store successfully argued that it did not violate the NLRA by enforcing an arbitration agreement that banned class and collective claims because the employee who brought the case had a 30-day time window to opt out of the agreement. According to the ALJ, the "opt-out procedure is sufficient to render the individual arbitration program voluntary." Likewise, on November 12, 2013, an ALJ concluded that the NLRB’s position on class waivers “cannot be sustained” in light of the Supreme Court’s decision in Italian Colors, which held that the FAA does not permit courts to invalidate class action waivers, even when the individual incentive is too small to arbitrate a statutory claim.
On November 21, 2013, however, an ALJ ruled that a 30-day opt-out provision did not save an arbitration policy containing a class action waiver that prohibited an employee from "filing, opting into, becoming a class member in, or recovering through a class action, collective action, representation action or similar proceeding" and further provided that the employee agreed "to bring any dispute in arbitration on an individual basis only.”
- Bargaining Units and Election Rules
In August 2013, the Sixth Circuit held that the NLRB acted within its discretion in deciding Specialty Healthcare and granted the NLRB's cross-petition for enforcement. In Specialty Healthcare, the NLRB redefined the standard for determining bargaining units in non-acute health care facilities, holding that unions can organize a relatively small bargaining unit consisting of employees sharing a "sufficient community of interest," even if the group excludes other employees who do similar work. Employers are concerned that the decision will further embolden unions to target smaller groups of workers that can be easier to organize, promoting the formation of mini-bargaining units in a range of industries.
Employers already have seen cases where the NLRB has found smaller units appropriate. For example, in Guide Dogs for the Blind (2013), the NLRB affirmed the acting Regional Director's finding that the petitioned-for unit of canine welfare technicians and instructors at a dog-breeding center was appropriate because those employees shared a substantial community of interest. In doing so, the NLRB rejected the employer's argument that the appropriate unit should include employees from five additional departments, including the breeding, puppy-raising, kennel, admissions and graduate services, and veterinary departments.
In another case involving a retail store, an NLRB Regional Director approved a unit consisting solely of women's shoes associates, notwithstanding the long-established presumption of “wall-to-wall” units for the retail sales industry. The Regional Director rejected the employer's contention that a larger unit of all retail sales associates would be more appropriate, noting that the test is not the single most appropriate unit. Rather, to defeat a union’s petitioned-for unit, the burden is now on the employer to demonstrate that employees in its counter-proposed, larger unit “share an overwhelming community of interest with those in the [union’s] petitioned-for unit." The NLRB granted review of the decision, which is pending.
This trend is likely to continue in 2014. The NLRB's newly appointed General Counsel Richard Griffin recently defended the Specialty Healthcare decision, noting that the NLRB historically has approved bargaining units with as few as 2 employees and that the median unit size in NLRB-conducted elections over the last 10 years has been between 23 and 27 employees. Griffin further noted that the NLRB is still looking at this issue and plans to issue a memorandum providing additional guidance. However, as interpreted by the NLRB, the “overwhelming community of interest” burden will be very difficult to overcome.
- Union Elections
In November 2013, NLRB members announced that union election rules are on the NLRB's agenda. The so-called "quickie" election rules, which were first proposed in June 2011 and subsequently revised in December 2011, would have significantly shortened the period for representation elections by dramatically altering employer rights and obligations in election proceedings. Since campaigns frequently begin months in advance of an employer's knowledge, the proposed amendments would have made it difficult for an employer to assess the situation and to explain its position to employees. The NLRB suspended its rules shortly after they were put into effect after the D.C. Circuit ruled that the NLRB lacked the necessary quorum. On December 6, 2013, the NLRB asked the D.C. Circuit to dismiss its appeal, clearing the way for the NLRB to redo its quickie election rule.
Board Member Pearce recently confirmed that the NLRB is considering election rules. Notably, the rules are the only item the NLRB included in the Office of Management and Budget’s list of all federal regulation currently under consideration. Accordingly, employers should prepare for NLRB action on this front.
With election rules front and center, employer should assess their labor relations policies and practices, including the vulnerability of possible voting (bargaining) units to union organizing activity, and train managers and supervisors to recognize early signs of union organizing activity. In addition, employers should develop a response (i.e., campaign strategy and materials) to union organizing and/or NLRB supervised union election in advance and monitor and update the strategy as facts and circumstances change within the work environment. A "campaign in a box" strategy can position employers to respond quickly in the event of a union petition.
Practical Implications for Employers
Employers who have not updated their employee handbooks in recent years should do so now. It is clear from the NLRB's 2013 decisions, as well as statements by NLRB members about the Board's agenda, that the NLRB will continue to aggressively attack employer handbook policies. In this regard, the precise wording of employer policies and work rules can make all the difference when it comes to assessing their validity under the NLRA. Accordingly, employers should choose their language carefully and consult with attorneys well versed in labor law to ensure their policies and practices comply with the NLRA.
In addition, employers can expect the NLRB to take up election rules, as well as its "Employee Rights" notice-posting rule. The NLRB's notice-posting rule, proposed in 2011, would require employers to notify employees of their rights under the NLRA, including the right to organize a union, to join or assist labor organizations, to bargain collectively, to discuss their terms and conditions of employment with co-workers, to take action with one or more co-workers to improve their working conditions, and to engage in other concerted activity, including strikes and picketing. Together with Specialty Healthcare, these rules have the potential to significantly alter the organizing landscape. Accordingly, employers should examine their ability to respond to an election petition under the NLRB's new procedures. Specifically, employers should assess their labor relations policies and practices and consider whether to conduct additional training or planning related to union organizing activity. Similarly, employers should prepare for the possibility of quicker elections and develop an effective communications plan to respond to union organizing in advance.
We will continue to monitor NLRB rulemaking initiatives and decisions. In the meantime, please contact any of the lawyers on our US labor team for more information about these developments and how to minimize labor risk in the New Year.