Why it matters

A group of Jimmy John’s workers lost the protection of the National Labor Relations Act (NLRA) with a disloyal poster campaign, the U.S. Court of Appeals for the Eighth Circuit ruled, refusing to enforce the order of the National Labor Relations Board (NLRB) that the employer ran afoul of the statute by disciplining and terminating the employees involved. As part of a campaign protesting the lack of paid sick leave at Jimmy John’s sandwich shops, the union created a poster with two identical sandwiches, one labeled as having been made by a healthy Jimmy John’s employee and the other made by a sick worker. “Can’t tell the difference?” the poster asked, adding, “That’s too bad, because Jimmy John’s workers don’t get paid sick days.” Several employees were disciplined and/or terminated because of their involvement in the campaign. An administrative law judge (ALJ) and the NLRB found the posters were not maliciously untrue and said the employer acted unlawfully by disciplining and terminating the employees involved. A three-judge panel of the Eighth Circuit agreed but the en banc court reversed, finding the poster so disloyal as to exceed the employees’ right to engage in concerted activities protected by the NLRA.

Detailed discussion

A Minnesota family company, MikLin Enterprises owned and operated 10 Jimmy John’s sandwich shop franchises in the Minneapolis-St. Paul area. Workers at the shops began organizing to join the Industrial Workers of the World union, with issues such as holiday pay and paid sick leave on the table.

In early 2011, the union decided it would focus on the demand for paid sick leave given the approach of flu season. As part of the campaign, the union created posters that featured two identical images of a Jimmy John’s sandwich. Above the first were the words, “Your sandwich made by a healthy Jimmy John’s worker,” while the statement above the second read, “Your sandwich made by a sick Jimmy John’s worker.”

Below the pictures, the poster asked: “Can’t tell the difference? That’s too bad because Jimmy John’s workers don’t get paid sick days. Shoot, we can’t even call in sick.” Slightly smaller font below cautioned, “We hope your immune system is ready because you’re about to take the sandwich test.”

Management removed the posters from store bulletin boards, but the union distributed a press release, a letter and the sandwich poster to local and national media outlets. The employer eventually fired six employees who coordinated the efforts and issued written warnings to three who assisted.

An ALJ concluded that MikLin violated Sections 8(a)(1) and (a)(3) of the NLRA for multiple reasons: discharging and disciplining the employees involved with the posters; soliciting employees to aid in removing the posters; encouraging employees to disparage a union supporter; and removing union literature from in-store bulletin boards.

On appeal to NLRB, a majority of the board affirmed the ALJ’s ruling. MikLin sought further appeal before the U.S. Court of Appeals for the Eighth Circuit, which initially affirmed. But after rehearing en banc, the panel issued a ruling both affirming and reversing the NLRB. While the court agreed with the board that the employer violated the statute by removing union literature from in-store bulletin boards and encouraging employees to disparage a union supporter, it found the workers involved with the posters lost the protection of the act.

The court harkened back to a 1951 U.S. Supreme Court decision, NLRB v. Local Union No. 1229, which involved employer Jefferson Standard Broadcasting Co. In that case, the justices established that the NLRA “did not weaken the underlying contractual bonds and loyalties of employer and employee,” noting that “[t]here is no more elemental cause for discharge of an employee than disloyalty to his employer.”

It is important to note this standard applies even where the disparaging employee communications expressly reference ongoing labor disputes, the Eighth Circuit said, as the Court found “[t]he fortuity of the coexistence of a labor dispute affords [the employees] no substantial defense.”

While the law has developed over the decades in its approach to the question of employee disloyalty, the Jefferson Standard disloyalty principle remains in place, a majority of the en banc court said, permitting an employer to fire an employee for “making a sharp, public, disparaging attack upon the quality of the company’s product and its business policies, in a manner reasonably calculated to harm the company’s reputation and reduce its income.”

The board “fundamentally misconstrued” Jefferson Standard in two ways, the panel said.

“First, while an employee’s subjective intent is of course relevant to the disloyalty inquiry—‘sharp, public, disparaging attack’ suggests an intent to harm—the Jefferson Standard principle includes an objective component that focuses, not on the employee’s purpose, but on the means used—whether the disparaging attack was ‘reasonably calculated to harm the company’s reputation and reduce its income,’ to such an extent that it was harmful, indefensible disparagement of the employer or its product,” the court wrote. “By holding that no act of employee disparagement is unprotected disloyalty unless it is ‘maliciously motivated to harm the employer,’ the Board has not interpreted Jefferson Standard—it has overruled it.”

The NLRB also incorrectly excluded all employee disparagement that is part of or directly related to an ongoing labor dispute. “[T]he Board refuses to treat as ‘disloyal’ any public communication intended to advance employees’ aims in a labor dispute, regardless of the manner in which, and the extent to which, it harms the employer,” the Sixth Circuit said. “As the Court held in Jefferson Standard that its disloyalty principle would apply even if the employees had explicitly related their public disparagement to their ongoing labor dispute, once again the Board has not interpreted Jefferson Standard—it has overruled it.”

Prior case law from the federal circuit has also found that an employee’s disloyal statements can lose Section 7 protection without a showing of actual malice, the court added: “Rather than employee motive, the critical question in the Jefferson Standard disloyalty inquiry is whether the employee public communications reasonably targeted the employer’s labor practices, or indefensibly disparaged the quality of the employer’s product or services.”

Applying this standard, the panel found that the poster crossed the line. “The attack was ‘sharp,’ proceeding ‘in a manner reasonably calculated to harm the company’s reputation and reduce its income,’” the court wrote. “The posters, press releases, and letter were an effective campaign to convince customers that eating Jimmy John’s sandwiches might cause them to become sick. The Sick Day poster warned that the reader was ‘about to take the sandwich test.’ Its enduring image was a MikLin-made Jimmy John’s sandwich that, although appearing like any other, was filled with cold and flu germs.”

Allegations that a food industry employer is selling unhealthy food are likely to have a devastating impact on its business, the panel added, and by targeting the food product itself, “employees disparaged MikLin in a manner likely to outlive, and also unnecessary to aid, the labor dispute. Even if MikLin granted paid sick leave, the image of contaminated sandwiches made by employees who chose to work while sick was not one that would easily dissipate.”

The NLRA “does not protect such calculated, devastating attacks upon an employer’s reputation and products,” the panel said, declining to enforce the board’s order that disciplining and terminating the employees involved with the poster violated the statute. Similarly, because the posters were not protected Section 7 activity, a Facebook post by one of MikLin’s owners encouraging people to take down the posters did not violate Section 8.

However, other findings of the board—that management encouraged employees to harass union workers for protected activities and removed in-store union literature—were affirmed by the en banc Eighth Circuit.

A dissenting opinion from two members of the panel argued that the board’s conclusion was “fully permissible” under Jefferson Standard, as motive is a “vitally important” factor in the disloyalty analysis.

To read the decision in MikLin Enterprises, Inc. v. NLRB, click here.