The NLRB's Assault on Employee Handbooks: Potentially Illegal Workplace Rules and Policies
Most employers and their legal counsel take pride in rules and policies that have become standard fare in the workplace. Employee Handbooks almost always contain, and certainly should contain, conspicuous provisions that expressly disavow the existence of any contract of employment or any intent to alter, amend or modify the parties' at-will employment relationship. Handbooks are also typically stuffed with policies designed to protect an employer's confidential information, discourage bad behavior and promote courtesy and professionalism in the workplace. These rules and policies make sense most of the time, and are perfectly legal most of the time.
Knowing what is perfectly legal, however, is not always easy. We lawyers don't always know a rule or policy is suspect until a court or government agency tells us it is. And, although the National Labor Relations Act (NLRA) does not immediately come to mind when thinking about employment relationships outside of the labor union context, it should.
The National Labor Relations Board (NLRB), a federal agency that enforces the NLRA, has been actively promoting what it calls employees' Section 7 rights to engage in "concerted activities." Section 7 of the NLRA guarantees employees "the right to self-organization, to form, join, or assist labor organizations . . . and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." These Section 7 rights apply to all employees and prospective employees, regardless of their union status or affiliation.
Employees engage in Section 7 concerted activities when they act in concert with, or on behalf of, their fellow employees for their mutual aid or protection with regard to the terms and conditions of their employment. "Concerted" does not have to be one-handed. Even a single employee can engage in concerted activities by lodging complaints on behalf of all employees. An employer who interferes with, restrains or coerces its employees in the exercise of their Section 7 rights commits an unfair labor practice in violation of Section 8 of the NLRA.
So what does that have to do with Employee Handbooks? Read on!
The NLRB has found that a workplace rule may be an unfair labor practice if it reasonably tends to chill employees in the exercise of their Section 7 rights. A workplace rule is unlawful if it explicitly restricts activities that are protected by Section 7, and, even if it doesn't, it may be unlawful if: (1) employees would reasonably construe the rule to prohibit Section 7 activity, (2) the rule was adopted in response to union activity, or (3) the rule has been applied to restrict the exercise of Section 7 rights. See Lutheran Heritage Village-Livona, 343 NLRB 646 (2004); citingLafayette Park Hotel, 326 NLRB No. 824 (1998).
Employer rules and policies have been under attack by the NLRB on a number of fronts in recent years. In 2012, the agency launched an onslaught of decisions assaulting employer rules and policies based on what it perceives to be violations of union and non-union employees' Section 7 rights. Here are some highlights.
At-Will Employment Contract Disclaimers
Most Employee Handbooks expressly state that the employer and employee have an at-will employment relationship and that the handbook is not a contract. Many also state that this at-will employment relationship cannot be amended, modified or altered in any way. The NLRB, however, has found that saying the employment relationship cannot be amended, modified or altered, without qualification, is an unfair labor practice. How can that be?
According to the NLRB, saying so can mean trouble. Although saying so does not expressly prohibit employees' concerted activities, the Board has found that it "clearly would reasonably chill employees who were interested in exercising their Section 7 rights" because, "[f]or all practical purposes, the clause in question premises employment on an employee's agreement not to enter into any contract, to make any efforts, or to engage in conduct that could result in union representation and in a collective-bargaining agreement, which would amend, modify, or alter the at-will relationship." American Red Cross Arizona Blood Services Region, 2012 WL 311334 (NLRB 2012). Whether that's true is debatable. But the Board does not like ambiguities, and it will almost always resolve them against the employer. SeeNorris/O'Bannon, 307 NLRB 1236, 1245 (1992). Right or wrong, the Board has condemned any workplace rule or policy setting an employee's at-will status in stone.
Nevertheless, Employee Handbooks should continue to state, as most do, that it is not a contract of employment, that the employment relationship is at-will, and that the at-will status of the relationship cannot be amended, modified or altered, "except by a written agreement signed by the owner or senior management of the company." There is no guaranty, but adding that express exception should satisfy the NLRB's concern about ambiguous workplace rules or policies that may restrict employees' Section 7 rights.
Confidential Information Rules and Policies
Protecting an employer's confidential and proprietary information is an extremely important goal of imposing workplace rules and policies. Most Employee Handbooks forbid the unauthorized use or disclosure of such information and broadly define what constitutes such information to include everything from how an employer conducts its business to where and with whom it conducts its business. Some define an employer's employment practices as confidential and, either formally or informally, attempt to restrict employees from talking to each other or with anyone about what they are paid, who has complained or who has been fired and why. No employer wants its employees to stir up trouble in the workplace if it can be avoided.
According to the NLRB, however, keeping a tight lid on such things when they concern the terms and conditions of employment is illegal. In one case, the Board found that a workplace policy defining confidential information to include "personnel information and documents" expressly interferes with employees' Section 7 rights because it prohibits them from sharing or talking about the terms and conditions of their employment with fellow employees or others – an outside union representative, for example. Flex Frac Logistics, L.L.C., 358 NLRB No. 127 (2012); see Lily Transp. Corp. & Robert Suchar, 362 NLRB No. 54 (filed March 30, 2015) (a recent case that, based on the Flex Frac decision, invalidated a similar confidentiality rule applied to employee personnel records); Tinley Park Hotel & Convention Ctr., LLC & Audelia Santiago, an Individual, 2015 WL 3759559 (NLRB, filed June 16, 2015) (an even more recent case invalidating a confidentiality rule that prohibited the "[u]nauthorized disclosure of confidential information relating to guests, visitors, clients or other associates (including wage and salary information to another associate) to anyone . . . except company personnel who have an authorized need to know . . . ."); see alsoIRIS U.S.A., Inc., 336 NLRB No. 1013 (2001) (rule that information about "employees is strictly confidential" and defined "personnel records" as confidential was unlawful).
Employee Handbooks should continue to protect and prohibit disclosure of an employer's confidential information, a legitimate and vitally important goal. To satisfy the NLRB, however, such provisions should not expressly include information or documents contained in employee personnel files or, at a minimum, should reference only the contents of employee personnel files that are protected by law as personal and confidential. Again, there is no guaranty, but adding that qualification should satisfy the NLRB's concern about workplace rules or policies that may restrict employees' Section 7 rights.
As an extra precaution, you may also want to add an express statement disclaiming any intent or effect of the rule or policy to restrict or interfere with employees' Section 7 rights, preferably in a formal, but straightforward manner. For example:
The National Labor Relations Act ("NLRA") states that "employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." This policy will not be construed or applied in a manner that may improperly interfere with or restrict any employee rights under the NLRA.
Employee Communications Rules and Policies
The fundamental principle behind NLRA Section 7 rights is to permit employees to communicate among themselves and with others about the terms and conditions of their employment. Any workplace rule or policy that may be construed to restrict or prohibit that fundamental principle is probably illegal.
This fundamental principle has been applied to all manner and form of employee communications. In one case, the NLRB found that a workplace policy restricting "idle gossip or dissemination of confidential information within [the company], such as personal or financial information, etc." violated Section 7 because it was overbroad and could reasonably be interpreted to prohibit employees from disclosing and discussing the terms and conditions of their employment. MCPC, Inc. and Jason Galanter, 2012 WL 2071758 (NLRB 2012); see also Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (2012) (HRconsultant's routine advice given to complaining employees that they not discuss the matter with their coworkers while the employer investigated their complaint violated the employees' Section 7 right to discuss the matter or the terms and conditions of their employment with their co-workers); Waco, Inc., 273 NLRB No. 746 (1984) (work rule prohibiting employees from discussing wages with coworkers is an unlawful restriction on Section 7 rights). Any discussion among employees, even idle gossip, regarding the terms and conditions of their employment counts as concerted Section 7 activity.
In another case, an employee was fired for criticizing her employer on Facebook. Tinley Park Hotel & Convention Ctr., LLC & Audelia Santiago, 2015 WL 3759559 (NLRB, filed June 16, 2015); see also Costco Wholesale Corp. and United Food and Commercial Workers Union, Local 371, 358 NLRB No. 106 (2012) (invalidating a rule prohibiting employees from posting anti-employer messages on the Internet). Modern technology changes the way employees talk to each other, but does not diminish their Section 7 rights in or outside of the workplace.
Employee Handbooks may continue to limit employee personal communications, at least while on the job. In order to satisfy the NLRB, however, such provisions should include that qualification or perhaps even expressly exclude personal communications while off the job that concern their employer or the terms and conditions of their employment. Again, there is no guaranty, but adding that qualification or exception should satisfy the NLRB's concern about workplace rules or policies that may restrict employees' Section 7 rights. Again, as an extra precaution, you may also want to add an express disclaimer of any intent or effect of the rule or policy to restrict or interfere with employees' Section 7 rights in a formal, but straightforward manner.
Employee Conduct and Anti-Disparagement Rules
Employers love rules that are intended to maintain courtesy, respect and decorum in the workplace and have a special place in their heart for rules that prohibit employees from bad-mouthing them at work or in public forums. The NLRB takes exception to that, however, because being discourteous or disrespectful and bad-mouthing your employer may look like protected Section 7 activities.
The employee in Tinley Park Hotel & Convention Ctr., LLC & Audelia Santiago, 2015 WL 3759559 (NLRB, filed June 16, 2015), who was fired for criticizing her employer on Facebook had violated numerous workplace rules that prohibited employees from making "false or malicious" statements about the company and from engaging in"discourteous or disrespectful treatment of . . . supervisors, or fellow associates," "disloyalty, including disparaging or denigrating the food, beverages, or services of the company," or "[a]ny other conduct that the company believes has created, or may lead to the creation of a situation that may disrupt or interfere with the amicable, profitable and safe operation of the company." Rules that demand decorum and respect or that prohibit bad-mouthing one's employer or fellow employees are a great idea, but are often found to violate employees' Section 7 rights because, if not qualified, they appear to insulate the employer from traditional forms of protest and civil unrest in the workplace.
The NLRB found that the Tinley Park Hotel rules were unlawful because they were overbroad, ambiguous and could reasonably be interpreted to restrict employees' Section 7 rights. Tinley Park Hotel, 2015 WL 3759559; see also Beverly Health & Rehabilitation Services, 332 NLRB 347 (2000), enf'd, 297 F.3d 468 (6th Cir. 2002) (invalidating a rule that prohibited "[m]aking false or misleading work-related statements concerning the company, the facility or fellow associates"); Purple Commc'ns, Inc. & Commc'ns Workers of Am., Afl-Cio, 197 L.R.R.M. (BNA) ¶1453 (NLRB 2013) (same regarding a rule that prohibited employees from "[c]ausing, creating, or participating in a disruption of any kind during working hours on [c]ompany property"); Karl Knauz Motors, Inc. dba Knauz BMW and Robert Becker, 358 NLRB No. 164 (2012) (same regarding a rule that prohibited "language which injures the image or reputation of the [employer]" or being "disrespectful" to co-workers or others); Claremont Resort & Spa, 344 NLRB 832 (2005) (same regarding a rule that prohibited "negative conversations about associates and/or managers").
The NLRB's goal to protect employees' Section 7 rights to criticize their employer extends to all kinds of bad behavior on the part of employees who complain about their job or working conditions.
In Plaza Auto Center, Inc. v. N.L.R.B., 664 F.3d 286 (9th Cir. 2011), for example, a used car salesman who had voiced numerous complaints about the terms and conditions of his employment lost his temper in a meeting with the owner of the company, calling him a "f***ing crook" and an "a**hole" and threatening reprisal if he were fired. He was, of course, fired. The NLRB found that, although an employee can lose Section 7 rights by abusing them, this guy did not cross that line, and the owner had violated his rights by firing him. The federal appeals court reversed and remanded the case to the Board to reconsider whether that line was crossed because of his use of vulgar, offensive and personally degrading language to make his point – one of four factors the Board should weigh in such cases. 664 F.3d at293-94; see Piper Realty, 313 NLRB No. 233 (1994) ("although employees are permitted some leeway for impulsive behavior when engaged in concerted activity, this leeway is balanced against an employer's right to maintain order and respect");compare DaimlerChrysler Corp., 344 N.L.R.B. No. 154 (2005) (finding that employee had lost his Section 7 rights by calling his supervisor an "a**hole" and yelling "f*** this shit") with Stanford New York, LLC, 344 NLRB No. 69 (2005) (employee maintained his Section 7 rights even though he called his boss a "liar" and a "f***ing son of a bitch").
On remand, the Plaza Auto Center Board re-affirmed its decision that the used car salesman had not crossed the Section 7 line by cussing out his employer. SeePlaza Auto Ctr., Inc. & Nick Aguirre, 360 NLRB No. 117 (2014). Depending on the facts, Section 7 can trump even the most foul, disloyal and insubordinate behavior in the workplace.
This does not mean that employers may not demand loyalty, courtesy, respect and decorum from their employees or include non-disparagement provisions in their rules and policies. In order to satisfy the NLRB, however, such provisions should now expressly exclude matters concerning the terms and conditions of their employment. Again, there is no guaranty, but that exception should satisfy the NLRB's concern about workplace rules or policies that may restrict employees' Section 7 rights. And, once again, as an extra precaution, you may also want to add an express disclaimer of any intent or effect of the rule or policy to restrict or interfere with employees' Section 7 rights in a formal, but straightforward manner.
Drafting and implementing Employee Handbooks and other workplace rules and policies is an important part of managing employees' behaviors and expectations in the workplace. As this article demonstrates, there are legal rabbit holes dug by courts and government agencies that make this process difficult to navigate. Never buy a generic Employee Handbook or a workplace rule or policy in a stationary store or from the Internet. Paying a competent attorney to make sure what you write and implement is both coherent and legal can prevent mistakes that will cost you and your business money.
About the author: David Farren is an attorney at the Phoenix law firm of Jaburg Wilk and works in employment law, contract and business disputes and commercial litigation. Got a question for David? Contact him directly.
This article is not intended to provide legal advice and only relates to Arizona law. It does not consider the scope of laws in states other than Arizona. Always consult an attorney for legal advice for your particular situation.
 There are, of course, exceptions for health care information and other purely private or personal information protected by law. Employers should never release such information to anyone for any reason without an employee's written consent and authorization.
 An interesting footnote to the Tinley Park Hotel case is that the employer's rules could have lawfully banned employees from making "false and malicious" statements about the company, but instead unlawfully prohibited them from making either "falseor malicious" statements about the company, a disjunctive distinction the Board has drawn to recognize an employee's apparent right to lie about his or her employer when engaging in Section 7 activities. See Valley Hospital Medical Center, Inc., 351 NLRB No. 88 (2007) ("mere fact that statements are false, misleading or inaccurate is insufficient to demonstrate that they are maliciously untrue"); First Transit, Inc., 360 NLRB No. 72 (2014) (disloyalty rule which prohibited "false, vicious, or malicious statements" concerning the company or its services was overbroad and unlawful).