NLRB Presses Its Attack on Common Handbook Provisions and Workplace Policies

Both non-union and union employers have been adversely affected by the National Labor Relations Board's ("NLRB") efforts to enforce the National Labor Relations Act ("Act") in areas that have not been thought of as "traditional" labor law. In three recent cases, the NLRB ruled that common handbook provisions and workplace policies addressing confidentiality, social media decorum and investigations violated the Act because the policies included language that, in the NLRB's view, employees reasonably would construe as prohibiting them from engaging in activities protected by Section 7 of the Act, such as discussing terms and conditions of employment with each other or union representatives. While many employers may be surprised to see the NLRB consider the validity of handbook provisions and workplace polices, especially in non-union settings, employees and unions have successfully used the NLRB on many occasions over the past few years to strike down employer policies and related discipline.

The NLRB applies the following test to determine the validity of employer policies:

If the rule does not explicitly restrict activity protected by Section 7, the violation is dependent upon a showing of one of the following: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.

Martin Luther Memorial Home, Inc., 343 NLRB 646, 647 (2004). In making this determination, the NLRB recently explained that "ambiguous employer rules – rules that reasonably could be read to have a coercive meaning – are construed against the employer." Flex Frac Logistics, LLC, 358 NLRB No. 127 (September 11, 2012).

In Flex Frac Logistics, LLC, the NLRB held that an employer's at-will policy statement violated the Act because it included a section regarding Confidential Information that, in the NLRB's view, was too broad. The section stated that employees could not share Confidential Information outside of the organization or make copies of any Confidential Information without prior management approval. The section defined Confidential Information as including "personnel information and documents."

The NLRB ruled that this language was unlawfully overbroad "because employees would reasonably believe that they are prohibited from discussing wages or other terms and conditions of employment with nonemployees, such as union representatives – an activity protected by Section 7 of the Act."
The NLRB added that the context of the disputed provision – being among a list of other things such as financial information, business plans and processes – did not reasonably suggest to employees that the disputed provision omitted wages since the list embraced virtually all information related to the employer and the reference to "financial information, including costs," necessarily encompassed wages.

In Costco Wholesale Corporation, 358 NLRB No. 106 (September 7, 2012), the NLRB ruled that the employer's social media policy, which prohibited employees from electronically transmitting, storing or displaying statements "that damage the Company, defame any individual or damage any person's reputation," violated the Act.

The NLRB reasoned that the foregoing provision was unlawful because it "encompasses concerted communications protesting the Respondent's treatment of its employees. Indeed, there is nothing in the rule that even arguably suggests that protected communications are excluded from the broad parameter of the rule."
The NLRB added that, "[i]n these circumstances, employees would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications (i.e., those that are critical of the Respondent and its agents)."

In Costco, the NLRB also upheld the administrative law judge's ("ALJ") determination that the employer's confidentiality policy was unlawful. The policy stated that "[a]ll Costco employees shall refrain from discussing private matters of members and other employees. This includes topics such as, but not limited to, sick calls, leaves of absence, FMLA call-outs, ADA accommodations, workers' compensation injuries, personal health information, etc."

The ALJ determined that the policy was unlawful because "employees would reasonably conclude that Respondent's rule prohibits them from discussing terms and conditions of their employment with other employees or with a union."
The ALJ added that, “[t]he best that can be said for Respondent's position is that its rule is somewhat ambiguous, but in my view, if Respondent had intended to prohibit only discussion of private medical information in its files, it could easily have done so."

Additionally, the NLRB in Costco upheld the ALJ's ruling that other confidentiality-related policies were equally overbroad. One such policy stated that, "[i]n the course of our business, we collect from members and employees a substantial amount of personal information (such as name, address, phone number, e-mail address, social security number, membership numbers and credit card numbers). All of this information must be held strictly confidential and cannot be disclosed to any third party for any reason…" The other policy provided that "[s]ensitive information such as membership, payroll, confidential financial, credit card numbers or employee personal health information may not be shared, transmitted or stored for personal or public use without prior management approval."

The AJL ruled that the former policy was unlawful because it includes employee information such as names and addresses of co-workers that could be obtained in the normal course of work from time cards or posted work schedules.
The ALJ held that the latter policy was unlawful because it includes payroll information, which employees have a Section 7 right to share.

In Banner Health System, 358 NLRB No. 93 (July 30, 2012), the NLRB held that the employer unlawfully maintained a practice of instructing employees who submit complaints to not discuss the matter with their co-workers while the employer's investigation is ongoing.

The NLRB explained that "[t]o justify a prohibition on employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees' Section 7 rights."
Based on this approach, the NLRB determined that "in order to minimize the impact on Section 7 rights, it was the Respondent's burden 'to first determine whether in an give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated or there [was] a need to prevent a cover up.' The Respondent's blanket approach clearly failed to meet those requirements."

Finally, while the mere maintenance of an overbroad policy violates the Act and will result in the issuance of a remedial order directing the employer to post a notice and correct the policy, in Flex Frac Logistics, the NLRB explained that discipline imposed under an overly broad policy is not per se unlawful. Instead, for the discipline to be unlawful, "the employee must have 'violated the rule by (1) engaging in protected conduct or (2) engaging in conduct that otherwise implicates the concerns underlying Section 7 of the Act.'"

The foregoing decisions illustrate the NLRB's ongoing efforts to strictly scrutinize common handbook provisions and workplace policies – in both union and non-union settings – to determine whether, in its view, employees would reasonably construe the provisions as prohibiting Section 7 activity, such as discussing the terms and conditions of their employment with each other, with union representatives or with the media. The decisions also demonstrate the ease with which the NLRB will find that snippets and arguable ambiguities within an otherwise legitimate policy will render the policy unlawful.

Accordingly, while employers across the country are contesting the NLRB's attacks and these issues likely will be addressed by various circuit courts, employers who wish to avoid litigation should reexamine their handbooks and other workplace policies, clarify any possible ambiguities and take appropriate steps to ensure that they do prohibit employees from engaging in activities protected by Section 7 of the Act.