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Legal Updates

NLRB Report Highlights Pitfalls Of Common Handbook Policies

The National Labor Relations Board (“NLRB” or “Board”) continues to give close scrutiny to whether employer personnel policies – including those of non-unionized employers – violate employees’ rights to engage in protected “concerted activities” under Section 7 of the National Labor Relations Act (“NLRA”).

In this regard, the NLRB’s General Counsel (“GC”) has released a new report addressing a number of types of policies commonly included in employee handbooks. The report discusses recent cases in which the GC issued formal complaints against employers upon finding that their personnel policies unlawfully chilled employees’ rights to engage in Section 7 activities.

The GC’s report also compares many specific policies deemed unlawful with others that were found not to violate employees’ Section 7 rights. Thus, while the GC’s report is not law, and indeed even the NLRB is subject to having its decisions overturned by the Circuit Courts of Appeal when one of them determines that an activist Board has overstepped its authority, nonetheless, employers should carefully review the GC’s report and consider whether it might be appropriate to revise any of their personnel policies in light of the potential risk of a challenge before the NLRB.

Legal Background

Under the NLRA, when employees act collectively for the purpose of bettering the terms and conditions of their employment, such actions generally constitute protected “concerted activity,” for which employees may not be penalized. Significantly, even actions taken by a single employee may be deemed protected concerted activity, if the employee undertakes them with the object of initiating or preparing for group action. Further, the NLRA’s protection of concerted activities applies equally to unionized and non-unionized employees.

The NLRB has held that a work rule (such as a handbook policy) violates the NLRA if it “would reasonably tend to chill employees in the exercise of their Section 7 rights.” The determination as to whether a rule would have such an effect is made through a two-step inquiry. First, if a work rule explicitly restricts protected concerted activities – for instance, by directing employees not to discuss work grievances with one another – the rule will be found unlawful on its face. Second, even if a rule does not explicitly limit protected concerted activities, it nonetheless will be deemed to violate the NLRA if (1) employees would reasonably construe it as prohibiting protected concerted activity, (2) the rule was promulgated in response to protected concerted activity, or (3) the rule has actually been applied to restrict the exercise of Section 7 rights. In general, if a rule appears ambiguous as to whether it restricts protected concerted activity, it is likely to be found unlawful.

Policy Provisions Discussed In Report

Some of the most significant categories of handbook policies discussed in the GC’s report are addressed below.

Overly broad confidentiality provisions. The NLRA gives employees the right to discuss wages, benefits, and other terms and conditions of employment with one another. The GC’s report details a number of specific confidentiality policies that the Board found unlawful on the basis that they could be construed as improperly prohibiting discussion of such information.

For instance, the Board challenged confidentiality policies that directed employees to avoid “[di]sclosing details about the [Employer],” and to “[d]iscuss work matters only with other employees who have a specific business reason to know or have access to such information.” In the Board’s view, such broad language could inappropriately deter employees from discussing their terms and conditions of employment, which the NLRA entitles them to do.

By contrast, the report notes that confidentiality policies likely will not violate the NLRA so long as the policies make clear that they are not intended to encompass employee information. For example, the Board upheld policies barring unauthorized disclosure of “business secrets or other confidential information,” and of “confidential financial data or other non-public proprietary information.”

Rules requiring “respectful” behavior. As the GC’s report highlights, employers should be wary of policies that could be interpreted as restricting employees from exercising their Section 7 rights to criticize supervisors or management. In this regard, the NLRB took issue with a policy that cautioned employees to “be respectful to the company, other employees, customers, partners, and competitors,” as well as with a policy prohibiting “defamatory, libelous, slanderous or discriminatory comments about [the company], its customers and/or competitors, its employees or management.”

By contrast, a policy that simply requires respectful behavior toward customers, vendors, and other third parties – without mentioning the employer or its employees – is likely to be found lawful. As one example, the Board upheld a handbook policy stating that “[e]mployees will not be discourteous or disrespectful to a customer or any member of the public while in the course and scope of business.”

Policies limiting communications with third parties. The NLRA also gives employees a right to communicate with the news media, government agencies, and other third parties regarding their terms and conditions of employment. Thus, the NLRB has challenged employer policies that, in its view, improperly restrict such communications. For instance, in one case cited in the GC’s report, the Board found unlawful a policy requiring employees to obtain permission from HR before “speak[ing] to any representatives of the print and/or electronic media about company matters.”

Conversely, policies that simply indicate that employees are not authorized to speak on their employers’ behalf – without prohibiting them from communicating with the media or other third parties altogether – are likely to be upheld. In particular, the Board found lawful a policy stating that, in crisis situations, “the company will respond to the news media in a timely and professional manner only through the designated spokespersons.”

Conflict-of-interest policies. The Board has taken issue with expansive conflict-of-interest policies, such as one that required employees not to engage in “any action . . . not in the best interest of the [company].” In the Board’s view, given most employers’ desire to remain non-unionized, employees would reasonably interpret such broad language as banning union organizing and other concerted activities protected under the NLRA.

Rather, the GC’s report suggests that conflict-of-interest policies include appropriate language indicating that they are meant to apply to financial conflicts of interest or other matters not covered by the NLRA. For instance, the Board upheld a policy admonishing employees to refrain “from any activity or having any financial interest that is inconsistent with the Company’s best interest.”

Rules forbidding employees from using company logos or trademarks. As the GC’s report notes, the Board has taken the position that employees have a Section 7 right to use their employers’ logos and trademarks in picket signs, leaflets, and other protest materials. Accordingly, a policy that categorically forbids employees from using their employer’s trademarked or copyrighted materials is unlikely to survive NLRB scrutiny.

However, if such a policy simply directs employees to comply with legal requirements relating to trademarks and copyrights, it is likely to be upheld. For example, in one case noted in the report, the Board upheld a policy instructing employees to “respect the laws regarding copyrights, trademarks, right of publicity and other third-party rights,” and not to “infringe on [employer] logos, brand names, taglines, slogans, or other trademarks.”

Prohibitions on “walking off the job.” One of the core protections provided by the NLRA is the right to strike in support of economic demands or in protest of unfair labor practices. Thus, while employers can legitimately direct employees to comply with attendance expectations, employers should avoid policy language prohibiting employees from “walking off the job.” Since, according to the Board, that phrase is commonly understood to refer to strikes, including it in a handbook may improperly deter employees from exercising their right to strike.

Restrictions on use of cameras and other recording equipment. Finally, the NLRB has taken the position that employees have a Section 7 right to make photographs and recordings, during non-working time, in furtherance of picketing, leafleting, or other protected concerted activity. For this reason, the Board deems policies categorically prohibiting employees from possessing or using cameras, cell phones or similar devices on company property to be unlawful. Instead, according to the GC’s report, such policies must be worded to prohibit the use of such devices only during time periods when employees are expected to be working.

Recommendations For Employers

In light of the GC’s report, and the NLRB’s continued focus on employer personnel policies, there are a number of steps that employers should consider taking.

First, employers should thoroughly review all existing personnel policies that potentially relate to protected concerted activities. In addition to the specific types of policies detailed above, such policies may include social media, e-mail, privacy, and business ethics policies, as well as codes of conduct.

Second, employers should consider, in consultation with experienced labor counsel, whether their existing policies should be revised to avoid an undue risk of running afoul of this Board’s interpretation of the NLRA. As the GC’s report underscores, it is crucial that personnel policies be worded with care so that it is clear that they are not intended to restrict protected concerted activities.

Additionally, employers are strongly encouraged to confer with experienced labor and employment counsel before terminating or otherwise disciplining an employee for violating a policy that might be construed as encompassing protected Section 7 activity. If the policy is overly broad, the proposed discipline could well spark an unfair labor practice charge.

Finally, employers should continue to monitor the Board’s and the GC’s pronouncements on personnel policies, to gauge when further review of (and perhaps revisions to) their policies may be in order.