D.C. Circuit Upholds NLRB's Continued Targeting of Workplace Rules

HIGHLIGHTS:

• In Hyundai America Shipping Agency v. N.L.R.B., the U.S. Court of Appeals for the District of Columbia Circuit again considered the National Labor Relations Board's expansive approach to worker protection while reviewing workplace rules on confidentiality, electronic communications and non-work activity.
• The Court's decision, largely upholding the Board, demonstrates the need for union and non-union employers to carefully review both oral and written workplace rules and policies, even if they do not on their face touch on union-organizing activity.

The National Labor Relations Board (NLRB or the Board) has continued its trend of subjecting employer work rules to scrutiny as to whether they unlawfully restrict workers' rights to form or join labor organizations, bargain collectively and engage in other concerted activities, rights secured by Section 7 of the National Labor Relations Act (NLRA). In a recent case, the U.S. Court of Appeals for the District of Columbia Circuit again considered the NLRB's expansive approach to worker protection while reviewing workplace rules on confidentiality, electronic communications and non-work activity. The Court's decision, largely upholding the NLRB, demonstrates the need for union and non-union employers to carefully review both oral and written workplace rules and policies, even if they do not on their face touch on union-organizing activity.

In Hyundai America Shipping Agency v. N.L.R.B., No. 11-1351, slip op. (D.D.C. Nov. 6, 2015), the D.C. Circuit upheld the Board's determination that three disputed rules violated Section 7 rights on their face, i.e., that "employees would reasonably construe [each rule] to prohibit Section 7 activity." First, the Court upheld the NLRB's striking down Hyundai's oral rule prohibiting employees from discussing the subjects of investigations. Hyundai argued that the U.S. Equal Employment Opportunity Commission (EEOC) recommends confidentiality in sexual harassment investigations. However, the Court sided with the NLRB in finding that insufficient to outweigh the limits placed on employee rights to discuss their employment because the rule applied to all investigations and was not limited to only EEOC-related investigations.

Hyundai Employee Handbook Provisions

The Hyundai employee handbook included a rule limiting the use of company electronic communications systems, stating, "employees should only disclose information or messages from theses [sic] systems to authorized persons." The Court upheld the NLRB's determination that the rule is facially invalid, agreeing that a reasonable employee could read it as a restriction on employees' ability to share information about terms and conditions of employment. Moreover, it was not limited to protection of a narrow category of only confidential information.

Next, the Court upheld the Board in finding unlawful a provision sanctioning disciplinary action up to termination for "[p]erforming activities other than Company work during working hours." The Court agreed with the Board's assessment distinguishing between rules restricting union activity during working hours (including breaks), which are presumptively unlawful, and restrictions of activity during active working time, which are permissible. Because this rule fell into the former category, it was invalid.

The Court reversed the NLRB on one rule and upheld as lawful a handbook provision urging employees to direct workplace complaints to their supervisors or Human Resources. The Court found that the policy encouraged employees to pursue these avenues for complaints, but noted that the policy's language was "neither mandatory nor preclusive of alternatives." Additionally, the handbook did not provide for disciplinary action for any employee complaints directed to co-workers. As a result, the Court disagreed with the underlying Board decision, finding that employees would not reasonably construe the complaint provision as prohibiting the discussion of complaints with others outside of management in violation of Section 7.

Considerations for Employers

This decision demonstrates how the variety of handbook rules that have drawn the NLRB's attention continues to grow. The validity of common provisions may turn on distinctions that are not intuitively apparent to even savvy managers. Timely review may help save problematical provisions with minor wording changes that will not change the objective sought. Often, provisions called into question are well-meaning efforts to provide useful guidance and to maintain workplace decorum. It is important to keep in mind that the NLRB's skeptical eye can turn even these seemingly innocuous workplace rules into a liability – whether oral, in standalone documents or incorporated in handbooks or manuals. Employers should consider a careful review in order to protect themselves from the NLRB's focus on these areas.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.