1

The NLRA: Key Issues For All Employers No Union, No Problem...But Is It? The NLRA's Impact on Non-Union Employers1

National Employment Law Council April 26, 2013

Dean Burrell, Gary Harrison-Ducros, Darren Jones, Samantha Martinez

It used to be that non-union employers paid little attention to the National Labor

Relations Act, thinking it had no applicability to the non-union workplace. However, through a

number of decisions, enforcement actions, and guidance documents, the National Labor

Relations Board reminded management during the first Obama administration that the law

applies to all workplaces, whether unionized or not. This article summarizes the most

important labor law issues of the last year that are applicable to all employers.

I. Legal Background: Section 7 of the NLRA

The basis for the application of the NLRA to non-union workplaces is found in Section 7

of the NLRA. Section 7 states in relevant part:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, and 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.2

1 The NLRB requires a quorum of at least three of five members to hear cases. In a recent case, three

justices of the D.C. Circuit decided that three of the five NLRB members were not properly appointed by the President because they were neither confirmed by the Senate, nor appointed during a valid Congressional Recess. The three members at issue were appointed on January 4, 2012, during a period in which the Senate was meeting in pro forma sessions every three days. The D.C. Circuit determined that a Recess only occurs when Congress formally adjourns at the end of a session. Consequently, the Senate was not in Recess while the pro forma sessions occurred and the members appointed during that period were not valid Recess appointments. As a result, the NLRB lacked a quorum to hear cases. Noel Canning v. NLRB, No. 12-1115(D.C. Cir. Jan. 25, 2013). This case could have far-reaching implications. If the decision stands, all cases heard with a quorum made with at least one of the January 4, 2012 appointees may be overturned. Furthermore, the NLRB also requires a quorum to perform rulemaking, so rules may also fall if a quorum did not exist. At this time, the NLRB has not petitioned for an en banc review by the full D.C. Circuit. Nor has it appealed to the U.S. Supreme Court. In any event, these recent events may affect some of the advice and decisions cited in this article. 2 29 U.S.C. § 157 (emphasis added).

2

The NLRB and courts interpret Section 7’s right to "engage in ... concerted activities for ...

mutual aid or protection" to apply to union and non-union workforces alike.

Section 8 of the NLRA makes it unlawful for employers (and unions) to engage in "unfair

labor practices," which would include retaliation against or interference with employees

exercising their Section 7 rights.3 The employee’s remedy is not court action. Instead, she must

file an unfair labor practice charge (“ULP”) with the NLRB.4 There is a six-month statute of

limitations beginning on the date when the ULP was committed.5 The NLRB’s Regional Director

may dismiss the charge, settle it, or issue a complaint. For Fiscal Year 2011, the Regional

Directors received 22,188 ULP charges, and found 37% to have merit.6 If a complaint is issued,

then the NLRB’s Office of General Counsel prosecutes the charge on behalf of the aggrieved

party, and the matter is heard before an administrative law judge.7 Adverse decisions may be

appealed to the full Board, and from there appealed to a federal circuit court of appeals.8

The standard remedies for Section 7 violations are back pay and an order to post a

notice regarding the violation at the workplace.9 In certain cases, the NLRB has also penalized

employers by imposing the litigation costs for the adjudication proceedings, attorney’s fees,

and union expenses involved in the litigation against the employer.10

II. Section 7 and Social Media Policies and Discipline Pursuant to Policies

3 29 U.S.C. § 158.

4 THE DEVELOPING LABOR LAW 2683 (John E. Higgins, Jr., et. al, eds, 5th ed. 2006) (1971).

5 See, e.g., USPS v. Marina Mail Processing Ctr., 271 NLRB 397, 400 (1984).

6 NLRB Performance and Accountability Report 2011 at 44,

https://www.nlrb.gov/sites/default/files/documents/189/nlrb_2011_par_508.pdf. 7 THE DEVELOPING LABOR LAW at 2695.

8 THE DEVELOPING LABOR LAW at 2699.

9 Id. at 2747.

10 Id. at 2782-83.

3

The issue garnering the most attention in the past year or so has been the Board’s

attention to employer social media policies. The Solicitor General has brought numerous

enforcement actions against employers for overbroad social media policies, stating that such

policies quash protected Section 7 behavior. In addition, it has penalized employers for

disciplining employees for online behavior, even disrespectful and rude behavior, which the

Board contends violates Section 7.

A. Social Media Policies.

The Board assailed a number of employer social media and electronic resources policies

that it claimed were overbroad. According to the NLRB, an overbroad social medial policy is

one that “would reasonably tend to chill employees in the exercise of their Section 7 rights.”11

In order to be overbroad, the Board need not show that the policy has had an actual adverse

effect on employees, but rather the policy could potentially impact employees’ actions. 12

The NLRB recently settled a case in which it alleged that an employer policy restricting

disparagement of the company, management, coworkers, and competitors in its social media

policy was unlawful.13 In another Advice Memorandum, the Office of General Counsel found

that an employer’s social media policy was unlawful because it was overbroad and limited

11

Lafayette Park Hotel, 236 NLRB 824, 825 (1998), enforced mem., 203 F.3d 52 (D.C. Cir. 1999), cited in Office of the General Counsel Advice Memorandum, October 19, 2012 available at http://www.nlrb.gov/cases-decisions/advice-memos, choose 2012, then the October 19, 2012 memo. 12

Lutheran Heritage Village-Livonia, 343 NLRB 646, 646 (2004). A rule is unlawful if it explicitly restricts Section 7 activities, or (a) employees would reasonably construe the language to prohibit Section 7 activities; (b) the rule is a response to union activity; or (c) the rule has been applied to restrict Section 7 rights. Id. at 646-47. 13

American Medical Response, No. 34-CA-12576, discussed in in Office of the General Counsel Advice Memorandum, October 5, 2010, available at http://www.nlrb.gov/search/advanced/all/a%3A3%3A%7Bi%3A0%3Bs%3A11%3A%2234-ca-12576%22%3Bi%3A1%3Bs%3A0%3A%22%22%3Bi%3A2%3Bs%3A0%3A%22%22%3B%7D (advice memorandum); see also http://www.nlrb.gov/news-outreach/news-releases/settlement-reached-case-involving-discharge-facebook-comments (announcing settlement).

4

employees’ abilities to collectively seek improved working conditions. 14 The social media policy

prohibited any reference to personal information of co-workers, clients, partners, or customers

without their express consent. It also stated that use of company logos and photographs of

stores was against policy. The NLRB decided that the restrictions could chill collective activity

because employees would reasonably perceive the restricton to forbid discussing work

conditions and wage information. In addition, the restrictions would also forbid an employee

from taking pictures of a peaceful union protest in front of a store, wearing a T-shirt with the

store’s logo in protest, or carrying a picket sign with the company’s name.

Similarly, an ALJ reviewed the employer’s social media policy and found several sections

violated the NLRA.15 This included a warning to make sure all social media posts are

“completely accurate and not misleading and that they do not reveal non-public information on

any public site.” This policy was considered overbroad because it could limit employees’ ability

to discuss labor policies, employee treatment, and terms and conditions of employment. In

addition, a statement that if the employee is in doubt about posting, he/she should contact the

employer before doing so was considered an illegal requirement to seek permission from the

employer before engaging in protected activities.

Another case considered an employer’s social media policies regarding contact with the

media and government, among other topics.16 The policy stated that an internal

Communications Department was responsible for media contact, and employees should not

communicate with the media regarding the Company without its approval. Employees were

14

Giant Eagle, Inc., No. 06-CA-37260, discussed in Office of the General Counsel Advice Memorandum, June 22, 2011, available at http://www.nlrb.gov/cases-decisions/advice-memos, choose 2011, then the June 22, 2011 memo. 15

General Motors, LLC, No. 07-CA-053570 (2012) (Sandron, ALJ). 16

Dish Network Corp., No. 16-CA-066142 (2012) (Ringler, ALJ).

5

also instructed to receive the Communications Department’s approvals before giving “any

presentations, speeches or appearances.” This policy was considered a violation of the NLRA

because it prohibited protected activities such as speaking to the press about working

conditions, speaking at a union rally, blogging about protected activities, etc.

Similarly, employees were instructed to inform the General Counsel of any

governmental contacts “concerning the company and/or relating to matters outside the scope

of normal job responsibilities.” Employees were instructed that they should refer all

governmental written correspondence and phone contacts to the General Counsel. This policy

was deemed illegal because it could be perceived to restrict the employees’ access to

governmental assistance (including that of the NLRB) regarding working conditions.

B. Discipline of employees for protected, concerted activity.

In order for an employee’s activity to be protected under Section 7, two tests must be

met. First, the activity must be "concerted," that is, "engaged in with or on the authority of

other employees."17 Thus, if an employee speaks out about a term and condition of

employment solely by and on behalf of himself, then the conduct is not concerted. Curiously,

this does not mean that an employee speaking out alone is without the statute's protection. If

a single employee "seek[s] to initiate or to induce group action" or "bring[s] truly group

complaints to the attention of management," then the conduct is concerted.18 Recently the

Board held that one employee who made a complaint at a staff meeting was engaging in

17

Meyers Industries, 268 NLRB 493, 497 (1984) (Meyers I), remanded sub nom. Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985). 18

Meyers Industries, 281 NLRB 882, 887 (1986) (Meyers II), enfd.sub nom. Prill v. NLRB, 835 F.2d 1481 (D.C. Cir. 1987).

6

concerted activity, even though he spoke out without the prior knowledge or support of his

coworkers.19

The second test examines whether the concerted activity's purpose is for "mutual aid or

protection." An employee action is for mutual aid or protection if it is to “improve terms and

conditions of employment or otherwise improve [employees’] lot … through channels outside

the immediate employee-employer relationship.”20 In Valley Hospital Medical Center, the NLRB

found that a nurse’s public criticism of her employer-hospital’s level of patient care to local

media was protected, despite the fact that the criticism did not relate directly to an ongoing

labor dispute, because “patient welfare and working conditions are often inextricably

intertwined.”21 Thus employee criticism that occurs outside the workplace in a public forum, as

well as criticism that touches topics tangential to working conditions, may well be protected.

However, there are limits on an employee’s protected conduct. An employee’s act may

be “so disloyal, reckless, or maliciously untrue [so as] to lose the Act’s protection.”22 In

particular, when an employee engages in an outburst against management, a fact finder should

consider (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature

of the employee’s outburst; and (4) whether the outburst was provoked by an employer’s

unfair labor practice.23 For example, an employee who called an executive a “f-ing idiot” to his

19

Worldmark by Wyndham, 356 NLRB No. 104 (2011), 190 L.L.R.M. 1121, 2011 NLRB LEXIS 63 at *4-8 (N.L.R.B. Mar. 2, 2011). 20

Valley Hosp. Med. Ctr., 351 NLRB 1250, 1252 (2007) (citing Eastex, Inc. v. NLRB, 437 US 556, 565 (1978), enfd. sub nom Nevada Service Employees Union, Local 1107 v. NLRB, 358 Fed. Appx.783 (9

th Cir. 2009)).

21 Id.

22 Emarco, Inc., 284 NLRB 832, 833 (1987). The U.S. Supreme Court has held that employee activity will lose

the Act’s protection if the “means” of the “attack” on an employer are targeted to engender public criticism rather than draw attention to a labor dispute. NLRB v. Local Union No. 1129, IBEW (Jefferson Standard), 346 US 464, 475 (1953). 23

Atlantic Steel Co., 245 NLRB 814, 816 (1979).

7

supervisors, in response to a letter from the executive to employees which he had not even

read, was not protected.24

This law has taken on new force in a world where much workplace commentary occurs

via social media. Thus the Board is applying the concepts described above to employees’ online

conduct, for example:

Hispanics United of Buffalo, Inc.25 In October 2010, an employee of a social services

agency posted on Facebook regarding a coworker who complained about others: “Lydia Cruz, a

coworker feels that we don’t help our clients enough at [the agency;] I about had it! My fellow

coworkers how do u feel?” Various employees responded to this, including statements such as,

“What the f… try doing my job I have 5 programs” and “Tell her to come do [my] f[-]ing job … if I

don’t do enough.” The attacked employee posted in response, “stop with [your] lies about

me.” All of the posts occurred on a day off, using the employees’ own electronic devices.

Cruz complained about the postings to management. The company investigated and

found that the posts violated the agency’s policy on bullying and harassment. The company

terminated the five posting employees.

The Board found that the employees were unlawfully discharged for discussing

criticisms of their job performance. The Board disregarded the fact that the posting employees

neither tried to change working conditions nor communicated directly with their employer,

instead finding that the employees were working together to defend themselves against a

reasonable belief that Cruz would report them to management: “[T]here should be no question

that the activity engaged in by the five employees was concerted for the purpose of mutual aid

24

Media General Operations, Inc. v. NLRB, 560 F.3d 181, 189 (4th

Cir. 2009). 25

359 NLRB No. 37 (2012), 194 L.R.R.M. 1303, 2012 NLRB LEXIS 852 (NLRB Dec. 14, 2012).

8

or protection as required by Section 7.” (internal quotations omitted) Moreover, the Board

rejected the employer’s argument that the employees’ actions were so unreasonable as to lose

Section 7 protection.

Lee Enterprises, Inc. d/b/a Arizona Daily Star.26 In this matter, the Arizona Daily Star

newspaper encouraged reporters to use Twitter to drive traffic to the newspaper’s website. A

reporter opened and maintained his own Twitter account, identifying himself as a Daily Star

employee and linking to the newspaper’s website. In early 2010, the employee tweeted, “The

Arizona Daily Star’s copy editors are the most witty and creative people in the world. Or at

least they think they are.” Shortly after, the paper’s managing editor met with the employee

and told him that he “was prohibited from airing his grievances or commenting about the Daily

Star in any public forum.” The employee continued tweeting, however, with tongue-in-cheek

references to crime and homicides. In September 2010, he made fun of a local TV station for a

grammatical error, and a station producer complained to the paper. Management told the

employee he could no longer tweet about work-related items, and the reporter discussed this

action with his coworkers. Just after, he was terminated for failure to be respectful despite

repeated warnings.

The Division of Advice recommended that this charge be dismissed for non-violation of

the statute because the employee was neither discussing the terms of his employment nor

trying to collectively act with other employees about the terms and conditions of employment.

26

No. 28-CA-23267. Information about this case was obtained from an Advice Memorandum issued April 21, 2011. The NLRB’s Office of General Counsel, Division of Advice, issues Advice Memoranda upon request of Regional Directors in order to opine whether or not case facts rise to the level of NLRA violations. See, e.g., Office of the General Counsel Advice Memorandum, February 28, 2013 (“The Region submitted this case for advice regarding whether a ‘Code of Conduct’ maintained as part of the Employer’s business ethics policy unlawfully interferes with employees’ Section 7 rights.”)

9

Although some of management’s statements were overbroad (like prohibiting all tweeting

before clarifying only work-related tweeting was to end), the firing was related to inappropriate

posts instead of to protected activity touching on conditions of employment.

Karl Knauz Motors, Inc.27 A BMW salesman attended a meeting with coworkers

regarding his employer-dealership’s sales event that featured hot dogs, cookies, and chips. The

salespeople complained collectively that the event should be more formal, arguing that it

would cheapen their product and lower their sales. A few days later, the salesman posted on

Facebook: “I was happy to see that [the dealership] went ‘All Out’ for the most important

launch of a new BMW in years… the new 5 series. A car that will generate tens of millions of

dollars in revenues for [the dealership] over the next few years. The small 8 oz bags of chips,

and the $2.00 cookie plate from Sam’s Club, and the semi fresh apples and oranges were such a

nice touch… but to top it all off… the Hot Dog Cart. Where our clients could attain an

overcooked wiener and stale bun[s]…”

At the same time, the employee posted pictures from a customer accident involving a

minor that occurred at an adjacent Land Rover dealership also owned by his employer, and

commented in part: “This is your car: This is your car on drugs…. This is what happens when a

sales Person (sic) sitting in the front passenger seat (Former Sales Person, actually) allows a 13

year old boy to get behind the wheel of a 6000 lb truck built and designed to pretty much drive

over anything. The kid drives over his father’s foot and into the pond in all about 4 seconds and

destroys a $50,000 truck. OOOPS!”

27

356 NLRB No. 164 (2012), 190 L.R.R.M. 1385, 2011 NLRB LEXIS 259 (May 27, 2011).

10

The dealership terminated the employee for the posts. The ALJ credited management’s

testimony that the employee was fired only for the Land Rover incident.

The ALJ opined that the food discussion was both protected, because it was tied to

concerns about employee compensation, and concerted, because the employee’s posting,

although done individually, was a “logical outgrowth” of the prior collective complaints.

However, the Land Rover incident was not protected or concerted because it did not affect

terms and conditions of employment, nor were other employees involved. In doing so the ALJ

sidestepped the employer’s argument that the language and tone were so offensive as to lose

the Act’s protection.

Three D, LLC.28 Several employees of a sports bar/restaurant were upset that they owed state

taxes. The two owners of the restaurant, Ralph DelBuono and Thomas Daddona, scheduled a

meeting to discuss the taxes due to employee concerns. However, before that meeting, a

Facebook conversation occurred between current employees, a former employee, and certain

customers on January 31, 2011.

Former employee LaFrance began the discussion by posting, “Maybe someone should

do the owners of [Three D] a favor and buy it from them. They can’t even do the tax paperwork

correctly!!! Now I OWE money… Wtf!!!!” She also posted, “It’s all Ralph’s fault. He didn’t do

the paperwork right. I’m calling the labor board to look into it because he still owes me about

2000 in paychecks.”

Among other comments posted, Employee Parent wrote, “Let me know what the board

says because I owe $323 and I’ve never owed.”

28

34-CA-12915 (2012) (Esposito, ALJ).

11

LaFrance responded, “I’m already getting my 2000 after writing to the labor board and

them investigating but now I find out he’s f***ed up my taxes and I owe the state a bunch.

Grrr.”

Later in the conversation, LaFrance commented, “Hahahaha he’s such a shady little

man. He probably pocked [the tax payments] from all our paychecks. I’ve never owed a penny

in my life till I worked for him. [Thank] goodness I got outta there.”

Employee Sanzone responded, “I owe too. Such an asshole.”

Then Parent wrote, “Yeah me neither. I told him we will be discussing it at the

meeting.”

Employee Spinella did not comment directly on this thread but clicked that he “liked”

the exchange.

The next day, Sanzone reported for work and was told she was fired. When she asked

why, Daddona responded that she “was not loyal enough to be working [at Three D] because of

her comment on Facebook.” Daddona later claimed to fire Sanzone for both the Facebook

incident and several cases where cash register receipts did not match the cash she had in the

register.

On February 3, Spinella was terminated after the owners pulled up the Facebook

conversation and informed Spinella that his “Like” indicated that he did not have the

restaurant’s best interests in mind. Daddona later testified that Spinella was terminated for

poor work performance, and the “Like” had no bearing on the termination decision.

An ALJ found the employees were engaging in protected Section 7 activities. The

Facebook discussion was deemed an extension of ongoing employee conversations regarding

12

the taxes; in fact, the employer had scheduled a meeting in response to employee concerns.

The posts also discussed possible requests for governmental assistance and specific issues

employees intended to discuss at the meeting, all of which was concerted activity. The ALJ also

concluded Sanzone and Spinella’s discharges were retaliatory for their Facebook comments.

C. Example of proper social media policy and actions.

Fortunately, employers have received some guidance on how to structure a social media

policy that is legal under Section 7.29 In a recent case, an employer’s social media policy was

approved in an Advice Memorandum from the Office of General Counsel of the NLRB. The

employer, Cox Communications, Inc., is a broadband service provider that provides television,

telephone, and internet service. It staffs a call center for customer technical support. Its social

media policy stated:

Nothing in Cox’s social media policy is designed to interfere with, restrain, or prevent employee communications regarding wages, hours, or other terms and conditions of employment. Cox Employees have the right to engage in or refrain from such activities . . . DO NOT make comments or otherwise communicate about customers, coworkers, supervisors, the Company, or Cox vendors or suppliers in a manner that is vulgar, obscene, threatening, intimidating, harassing, libelous, or discriminatory on the basis of age, race, religion, sex, sexual orientation, gender identity or expression, genetic information, disability, national origin, ethnicity, citizenship, marital status, or any other legally recognized protected basis under federal, state, or local laws, regulations, or ordinances. Those communications are disrespectful and unprofessional and will not be tolerated by the Company . . .

29

Office of the General Counsel Advice Memorandum, October 19, 2012 available at http://www.nlrb.gov/cases-decisions/advice-memos, choose 2012, then the October 19, 2012 memo.

13

DO respect the laws regarding copyrights, trademarks, rights of publicity and other third-party rights. To minimize the risk of a copyright violation, you should provide references to the source(s) of information you use and accurately cite copyrighted works you identify in your online communications. Do not infringe on Cox logos, brand names, taglines, slogans or other trademarks.

After this policy was released, a technical service employee fielded a call from a

customer about why his cable television service went out. The outage was due to scheduled

maintenance and the employee informed the customer that service would be returned when

the testing was complete. Apparently, the customer was displeased and called the employee a

“faggot” before hanging up.

The employee immediately accessed his Google+ account from his cell phone and

posted: “Just because you are having problems with your tv service does not mean you should

call me a faggot! F*** YOU!” The employee was identified in his personal profile as Cox

employee on his Google+ page, which was publicly available.

One coworker responded, “Doesn’t it? I thought that entertainment was the single most

important thing ever! How can anyone take away someone’s Jersey Shore and Real

Housewives of vomits loudly without being a raging bassoon?”

A supervisor who saw the post reported it to management, and the employee was later

fired after an investigation revealed many other postings with lewd language directed at

customers.

After reviewing the social media policy, the NLRB Office of General Counsel determined:

The Cox social media policy does not explicitly restrict Section 7 behavior.

14

There was no evidence Cox promulgated the rule in response to union activity or used it

to restrict protected activities.

The employees could not reasonably construe the social media policy to restrict Section

7 rights because:

The restrictions against communications about “customers, coworkers, supervisors, the

Company, or Cox vendors or suppliers in a manner that is vulgar, obscene, threatening,

intimidating, harassing, libelous, or discriminatory” were reasonable restrictions on egregious

communications that would not impede legitimate unionizing activities in the way a more

broadly worded policy might (such as a policy prohibiting negative comments about

supervisors).

o The statement that employees should obey the law with regard to intellectual

property does not prohibit all use of identifying company materials but “merely

urges employees to respect the laws.”

o The savings clause, which stated that “nothing in Cox’s social media policy is

designed to interfere with, restrain, or prevent employee communications

regarding wages, hours or other terms and conditions of employment” indicates

the employer’s intent not to restrict legitimate collective actions.

The employee’s discharge was also upheld on the basis that the employee was not

attempting to engage in concerted activities regarding terms of employment. The post was

directed at the customer, not co-workers, and “vented in vulgar terms his anger at the

customer.” The only coworker response was “a sarcastic comment . . . [that] did not treat [the

post] as a discussion about mutual concerns.”

15

The Office of General Counsel also approved Wal-Mart’s social media policy in an earlier

advice memorandum.30 The General Counsel not only found the entire policy lawful, he

attached the two-plus page policy to the Memorandum (although it did not reference Wal-Mart

by name). The policy prohibits “inappropriate postings that may include discriminatory

remarks, harassment, and threats of violence or similar inappropriate and unlawful conduct.” It

also exhorts employees to “Be Respectful” and “fair and courteous” in posting comments and

complaints. These and similar prohibitions on “malicious, obscene, threatening, or

intimidating” behavior were permissible expressions of an employer’s duty to maintain a

harassment-free and respectful workplace. The Memorandum specifically pointed out that

even if the policy could be construed as overbroad in places, it contained examples of lawful

and unlawful conduct that demarcated protected conduct.

III. D.R. Horton: Arbitration Agreements and the NLRA

In 2012, the NLRB determined that home builder D.R. Horton’s employment agreement

that required employees to forego class and collective actions in any forum (courts,

arbitrations, etc.) as a condition of employment violated the employees’ Section 7 right to

pursue concerted activities for mutual aid or protection.31

The agreements the employees signed required them to arbitrate any employment

claims and restricted arbitration to only the individual employee’s claims. Later, a former

employee attempted to file a collective action arbitration claim under the FLSA, which D.R.

Horton claimed was prohibited by the arbitration agreement because the employee could only

file for his individual claims. The NLRB disagreed, citing precedent prohibiting restriction of

30

NLRB Advice Memorandum, No. 12-59 (May 30, 2012). 31

357 NLRB No. 184 (2012), 192 L.R.R.M. 1137, 2012 NLRB LEXIS 11 (Jan. 3, 2012).

16

class and collective actions and a public policy argument that employees need the right to join

forces to balance the power held by the employer. As a result, the sections of the arbitration

agreement that: (1) restricted the employees’ ability to file class or collective actions in courts,

as opposed to arbitrations; and (2) prohibited class or collective actions of employees against

their employers were found to be in violation of Section 7. The NLRB also claimed this policy

was in harmony with the Federal Arbitration Act (“FAA”). The decision has been appealed to the

Fifth Circuit for review.32

In the meantime, several courts have refused to defer to the D.R. Horton decision,

arguing that the FAA allows arbitration of all employment claims and employees can waive their

rights to pursue class or collective actions. When considering whether an employer could

require arbitration of FLSA collective actions, one U.S. District Court noted that the NLRB is not

entitled to deference on interpretation of the FAA, the decision was contrary to circuit

precedent regarding the enforceability of arbitration agreements, and conflicted with Supreme

Court precedent on the FAA.33

Another U.S. District Court rejected a Plaintiff’s claim that a “Binding Arbitration

Affirmation” between the Plaintiff and her former employer was not binding when she sued to

create an FLSA collective action. The court stated that precedent allowed for parties to waive

their rights to class or collective actions, and this waiver was within the FAA’s policy of favoring

32

D.R. Horton v. NLRB, No. 12-60031 (5th Cir.). 33

Carey v. 24 Hour Fitness USA, Inc., 2012 U.S. Dist. LEXIS 143879, at *4-6 (S.D.Tex. Oct. 4, 2012). After providing this analysis, however, the court decided the case on more narrow grounds. It noted that the employees of this employer were permitted to opt out of the arbitration program. As a result, D.R. Horton would not apply to these employees because D.R. Horton involved accepting binding arbitration as a condition of employment. Id. at *6-7.

17

arbitration.34 The court also rejected the D.R. Horton case as a reason to abrogate the

arbitration agreement, stating it “joins numerous other courts in finding the NLRA does not

determine whether a plaintiff has a right to bring a collective action under the FLSA.”35

The Eighth Circuit also considered the issue in the context of an FLSA claim.36 The

Plaintiff signed an arbitration agreement with her employer that required all claims to be

arbitrated and prohibited all class or collective actions.37 After determining that the FAA would

allow for an arbitration agreement under the FLSA, the Court turned its attention to D.R.

Horton.38 It decided: (1) the employer’s arbitration agreement did not restrict employees from

contacting governmental agencies (such as the EEOC or Department of Labor), which could

then initiate a class action on the employees’ behalf. As a result, the employee’s class and

collective action rights were not terminated by the agreement; (2) the NLRB was not owed

deference because it had attempted to harmonize its opinion with U.S. Supreme Court

precedent and courts do not owe deference to agency interpretations of Supreme Court

opinions; (3) upholding the arbitration agreement is “consistent with more than two decades of

pro-arbitration Supreme Court precedent”; and (4) the majority of courts reviewing the D.R.

Horton decision chose to uphold the arbitration agreements rather than the NLRB’s

determination.39

34

Ryan v. JPMorgan Chase & Co., 2013 U.S. Dist. LEXIS 24628, at *6-16 (S.D.N.Y. Feb. 21, 2013). 35

Id. at *16. 36

Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). 37

Id. at 1052. 38

Id. at 1052-53. 39

Id. at 1053-55.

18

This issue will remain contentious until at least the Fifth Circuit issues its decision on

D.R. Horton’s appeal of the Board decision. Employers should know that although most courts

have refused to void arbitration agreements based upon the NLRB’s decision, a few have.40

IV. No Solicitation Notices

Generally speaking, employers can prohibit employees from soliciting for a union during

work time, but cannot stop employees from soliciting on employer’s premises during non-work

time (such as lunch breaks).41 Non-solicitation policies are presumptively lawful if they only

limit solicitation during working time, but may become unlawful if they are “accompanied by

employer signage, language, or conduct that creates an ambiguity . . . if employees may

‘reasonably construe’ the rule as prohibiting them from exercising their Section 7 rights.” 42

The NLRB put out an advice memorandum in August 2012 discussing an employer’s “no

solicitation” sign at the front of its retail stores, where both customers and employees enter.43

The employer, Verizon Wireless, had a policy prohibiting union solicitation during work hours,

but not during non-work hours.

The NLRB decided that under the Verizon Wireless circumstances, the “no solicitation”

signs were not a violation of employees’ Section 7 rights because the employer’s policy clearly

limited its no solicitation policy to employees to work time. Furthermore, employees would not

reasonably construe the signs to prohibit Section 7 behavior because:

their location on a public door and, at least at one location, next to information for the public (such as store hours) indicated the “no solicitation” request was for the general public;

the signs were not added in response to a union campaign; 40

See, e.g., Herrington v. Waterstone Mortg. Corp., 2012 U.S. Dist. LEXIS 36220 (W.D. Wis. Mar. 16, 2012); Raniere v. Citigroup, Inc., 827 F.Supp.2d 294 (S.D.N.Y. 2011). 41

Republic Aviation v. NLRB, 324 U.S. 793, 803 (1945). 42

NLRB Advice Memorandum (Aug. 30, 2012). 43

Id.

19

no employee was disciplined for union organizing during his/her non-work time. V. At-Will Employment Statements In Employee Handbooks

Recent guidance from the Board has focused attention on the language of at-will

policies. There was much negative commentary from employers after an ALJ held that an

acknowledgment form of an employee handbook that included the statement, “I further agree

that the at-will employment relationship cannot be amended, modified, or altered in any way”

violated the employees’ Section 7 rights by foreclosing the opportunity for the employees to

collectively act to modify their at-will status.44

However, two recent Advice Memoranda from the NLRB Office of the General Counsel

have clarified that not all at-will employment statements violate Section 7.45 Both companies’

handbooks clarified that the employees were at-will, and therefore could be terminated at any

time. In one case, the employer’s handbook stated that “No representative of the Company

has authority to enter into any agreement contrary to the foregoing ‘employment at will’

relationship.”46 The second stated, “No manager, supervisor, or employee of [employer] has

any authority to enter into an agreement for employment for any specified period of time or to

make an agreement for employment other than at-will. Only the president of the Company has

the authority to make any such agreement and then only in writing.”47

The Charging Parties alleged that such language limiting modification of the at-will

relationship chilled employees Section 7 rights. Both Advice Memoranda concluded, however,

44

Am. Red Cross Az. Blood Svcs. Region, No. 28-CA-23443 (Meyerson, ALJ). 45

NLRB Advice Memorandum, No. 28-CA-084365 (Oct 31, 2012); NLRB Advice Memorandum No. 32-CA-086799 (Oct 31, 2012). 46

NLRB Advice Memorandum, No. 28-CA-084365 (Oct 31, 2012). 47

NLRB Advice Memorandum No. 32-CA-086799 (Oct 31, 2012).

20

that these notices regarding employment at-will did not impede the employees’ Section 7 rights

to change their employment status or reasonably chill collective action.48 Nor were the rules

promulgated unlawfully in response to union activity. Instead, they simply informed the

employees about management’s authority to make those decisions. Consequently, there were

no Section 7 violations.49

In particular, the General Counsel highlighted that the policies did not restrict an

employee’s right to seek to modify his at-will status.50 Moreover, the Memo concluded,

provisions which state that handbooks do not create employment contracts are commonplace

are lawful and commonplace. The General Counsel distinguished the American Red Cross

decision by stating that it involved an outright waiver of the right to modify the at-will

relationship, which would restrict Section 7 activity in the future.51

Employers should review their at-will notices in their handbooks to determine which

language is used to describe the at-will relationship. The Office of General Counsel appears to

sanction broad policies that define at-will employment; restrict who can modify the at-will

relationship to high-level executives; and state that the handbook does not create a contract.

However, if the employee is required to sign a waiver of the right to seek to modify her at-will

status, then it likely runs afoul of these interpretations.

VI. Confidentiality of Investigations

48

NLRB Advice Memorandum, No. 28-CA-084365 (Oct 31, 2012); NLRB Advice Memorandum No. 32-CA-086799 (Oct 31, 2012). 49

NLRB Advice Memorandum, No. 28-CA-084365 (Oct 31, 2012); NLRB Advice Memorandum No. 32-CA-086799 (Oct 31, 2012). 50

No. 28-CA-084365 at pp. 3-4. 51

Id.

21

The National Labor Relations Board held broadly that routine admonitions to non-

supervisory and non-managerial employees to keep investigation interviews confidential

violated Section 7 of the National Labor Relations Act.52 Section 7 protects these employees’

rights to engage in “protected and concerted activity” protesting terms and conditions of their

employment. The NLRB found that a “generalized concern with protecting the integrity of its

investigation is insufficient to outweigh employees’ Section 7 rights.”

The rights described in Banner Health do not apply to supervisory and managerial

employees, and so this decision should place no limitation on an employer’s right to instruct

those employees to treat the investigation as confidential and privileged. However, to the

extent that a non-supervisory employee falls within the scope of the attorney-client privilege,

Banner Health would seem to be at odds with the need to ensure that privileged conversations

occurring pursuant to a company investigation remain truly confidential.

Still, Banner Health allows employers to instruct even non-supervisory and non-

managerial employees to keep an investigatory interview confidential under some

circumstances. The NLRB held that if an employer has a “legitimate business justification” for

keeping an investigation confidential, it outweighs the employees’ Section 7 rights. The Board

specifically listed as potential justifications: protecting witnesses, preventing destruction of

evidence, preventing fabrication of testimony, or preventing a cover up. Notably, maintaining

the attorney-client privilege is not on the list. Notwithstanding this, companies must take

precautions to keep interviews confidential to maintain the privilege, and thus arguably such an

action is a “legitimate business justification” excepted from Banner Health’s holding.

52 Banner Health System, 368 NLRB 93 (2012).

22

VII. Picketing of non-union workplaces

In its latest phase to rally and organize Wal-Mart workers, the United Food and

Commercial Workers International Union engaged in picketing and protests of numerous Wal-

Mart stores late last year. In November 2012, Wal-Mart filed an unfair labor practice charge

with the Board, alleging that the UFCW had illegally picketed its stores for more than 30 days

straight without filing a petition to be recognized as the bargaining representative.

The UFCW contacted the Office of General Counsel while the charge was pending, and

stated that its intent in its actions was not to organize workers with the goal of representing

them. Rather, its goal was “to help [Wal-Mart] employees as individuals or groups in their

dealings … over labor rights and standards” as well as help them force Wal-Mart to “publically

commit to adhering to labor rights and standards.”53 The Union also promised to disclaim any

organizational objective on its websites for Wal-Mart employees and to refrain from picketing

and confrontational conduct for 60 days. It also stated that it would not contest entry of a

temporary injunction based on any future similar conduct.

On January 30, 2013, the Office of General Counsel issued an Advice Memorandum,

stating that these assurances were sufficient to hold the charge in abeyance and dismiss the

charge if the Union were to comply with the commitment. Commentators immediately cried

foul, noting that the Union was being held to a lesser standard than many employers. The

Union-sponsored Wal-Mart groups also appeared largely undeterred, even stating publicly on a

53

NLRB Advice Memorandum, No. 26-CP-093377 (January 30, 2013)

23

website that although they could not picket, they would “protest, demonstrate, and strike,” if

necessary, to continue their campaign.54

In late March 2013, Wal-Mart sued the UFCW and its anti-Wal-Mart affiliates for

trespass after their latest round of protests.55

In refusing to pursue this charge, the Board has permitted facially unlawful conduct to

be exonerated with a mere statement of intent, and easily-sidestepped promises. Employers

may find that their charges against unlawful union activity are not pursued as rigorously as

charges against their own alleged anti-union conduct. Many commentators see this as yet

another expression of an overly union-friendly Board.

54

OUR Wal-Mart Statement on Labor Board Memo, posted January 31, 2013, found at http://makingchangeatwalmart.org/2013/01/31/our-walmart-statement-on-labor-board-memo/?utm_source=rss&utm_medium=rss&utm_campaign=our-walmart-statement-on-labor-board-memo. 55

Wal-Mart Sues Grocery Union, Others Over Trespassing in Florida, Reuters, March 25, 2013, found at http://www.reuters.com/article/2013/03/25/us-walmart-trespass-lawsuit-idUSBRE92O0W820130325?feedType=RSS.