Handbook Wars – Common Sense Returns NLRB Overhauls Standard for Legality of Work Rules

We have noted many times over the years how the NLRB’s zeal to review employer policies, or more correctly, fragments of employer policies, for lawfulness has led to nettlesome issues that rarely, if ever, involve actual employees.  The results have been absurd and have raised an entire cottage industry of attacks on language by unions and vetting of employer policies for lawfulness.

This may be ending.  As we noted yesterday, the NLRB issued a significant decision that will have far-reaching implications for both unionized and non-unionized workplaces.  In Boeing Company, 365 NLRB No. 154 (2017), the Board established a new standard for evaluating whether facially lawful workplace rules, policies or employee handbook provisions unlawfully interfere with employees’ exercise of Section 7 rights.  In so doing, the Board placed in doubt the applicability of scores of decisions issued in the 13-years since Lutheran Heritage, 343 NLRB 646 (2004), was decided.  We previously identified this issue as a case that the NLRB would revisit once a new majority was installed.

“Reasonably Construe” Standard

For the last 14 years the Board evaluated whether an employee would “reasonably construe” the language of a work rule to prohibit the exercise of NLRA rights.  If it did, then the rule—regardless of whether it actually restricted Section 7 activity—was found unlawful.  Applying this standard, an inconsistent line of cases developed.  Take, for instance, a sampling or recent decisions concerning “civility in the workplace.”  A rule prohibiting “abusive or threatening language to anyone on Company premises” was lawful, while a rule restricting “loud, abusive or foul language” was not.  And, as noted, a policy or fragment of a policy could be found unlawful even if there was no evidence that employees read the policy or were even aware of its existence.  It was, in terms of the NLRA, a victimless crime.

Policy Considerations Behind Abandoning The Lutheran Village Standard

The new three member Board majority (Miscimarra, Kaplan and Emmanuel) decided to change this standard because employers were often held to an impossible standard of precision in drafting language in which they would need to foresee any potential impact on any Section 7 right, regardless of how remote.  An employer would have to foresee the future, which the majority characterized as requiring “perfection that literally is the enemy of the good.”  The Lutheran Heritage standard has been criticized as unworkable by many in the employer community, and by various Board members over the years.  So it is not surprising that that a new standard was on the agenda.

New Balancing Test

The Board abandoned the singularly-focused and vague “reasonably construe” standard, in favor of a new balancing test, which would consider the impact of the rule on NLRA rights and an employer’s business justification for the rule.  Going forward,  in order to provide greater clarity and certainty to all parties, the Board indicated it would categorize the results of future decisions in three ways:

  • Category 1: Lawful rules because (i) when “reasonably interpreted,” the rule does not prohibit or interfere with the exercise of NLRA rights or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of these types of rules include the no-camera requirement in the Boeing case, where the employer supported its rule with multiple business and security justifications.  The Board also found that a rule requiring employees to have “harmonious interactions and relationships” in the workplace, and other rules requiring employees to abide by basic standards of civility would be categorically lawful.
  • Category 2: Rules warranting individual scrutiny on a case-by-case basis.
  • Category 3: Unlawful rules because they would prohibit or limit NLRA-protected conduct, and the adverse impact is not outweighed by legitimate business justifications (e.g., a rule prohibiting discussion of wages or benefits with another).

The Board proceeded to use this new framework to find that Boeing’s policy restricting the use of camera-enable devices was justified in light of the employer’s security concerns.  As it does in every case in which it overrules precedent and/or sets a new standard, the Board weighed whether to apply this new test retroactively, and decided to apply the standard to all pending cases in whatever stage.

Impact of this Decision

It will be some time before the full impact of the decision will be felt as rules are evaluated under the new standard.  However, the fact Lutheran Heritage was overruled likely will inhibit unions from attacking employer policies as the forum for these sorts of claims is less receptive.

Because the Board will evaluate the purpose for the rule, employers should consider clearly articulating the reasons for a rule in the policy.

Also, employers may feel less constrained by the thicket created by the previous standard; however, the true impact of Boeing likely will be felt once the host of pending cases work their way through ALJs and the Board under this new paradigm.  Only then will employers understand how the Board’s new categories will work.  We will keep you posted…there is sure to be more to follow.

© 2017 Proskauer Rose LLP.
This post was contributed by Mark Theodore and Joshua S Fox of Proskauer Rose LLP.
For more on the NLRB go to the National Law Review’s Labor and Employment Practice group page.

The Latest in the NLRB Handbook Saga? Another Unlawful Recording Policy Fails to Pass Muster

Whole-Foods-Market.jpgLast month, the National Labor Relations Board (NLRB) yet again shed further light on its analysis – and increased scrutiny – of employers’ handbook policies.  The NLRB’s decision in T-Mobile USA, Inc., 363 NLRB No. 171 (Apr. 29, 2016), serves as a follow-up to an earlier decision with respect to rules restricting employees’ use of recording devices.  We talked about the T-Mobile decision in our post last week and thought we would continue the discussion by elaborating on another of the board’s decisions on recording rules.

In one of many recent decisions scrutinizing employer handbook policies, the board in Whole Foods evaluated an employer rule prohibiting the use of recording devices on company premises.  Whole Foods, 363 NLRB No. 87 (Dec 24, 2015).  The NLRB specifically explained that it was not holding that all rules regulating recordings are invalid.  Rather, the board found “only that recording may, under certain circumstances, constitute protected concerted activity under Sec. 7 and that rules that would reasonably be read by employees to prohibit protected concerted recording violate the Act.”  Id. at *3, n.9.  The NLRB further explained that employers are not prohibited from maintaining rules restricting or prohibiting employee use of recording devices, but they must be narrowly drawn so that employees understand that Sec. 7 activity is not restricted.  This was the board’s issue with respect to the Whole Foods policy, as it found the rules to be overly broad.  The board relied on the fact that the rules applied regardless of the type of activity engaged in and that it covered all recordings.

The T-Mobile decision, which we wrote about last week, provides additional insight on how to interpret Whole Foods.  In T-Mobile USA, Inc., 363 NLRB No. 171 (Apr. 29, 2016), the board found the following policy to be unlawful:

To prevent harassment, maintain individual privacy, encourage open communication, and protect confidential information, employees are prohibited from recording people or confidential information using cameras, camera phones/devices, or recording devices (audio or video) in the workplace. Apart from customer calls that are recorded for quality purposes, employees may not tape or otherwise make sound recordings of work-related or workplace discussions. Exceptions may be granted when participating in an authorized [] activity or with permission from an employee’s Manager, HR Business Partner, or the Legal Department. If an exception is granted, employees may not take a picture, audiotape, or videotape others in the workplace without the prior notification of all participants.

Id. at *4.  The administrative law judge found that T-Mobile had set forth valid, nondiscriminatory rationales for the rule, including maintaining a harassment-free work environment and protecting trade secrets, and that the rule was narrowly tailored to these interests.  However, the NLRB reversed, noting that “[t]he rule does not differentiate between recordings that are protected by Section 7 and those that are not, and includes in its prohibition recordings made during nonwork time and in nonwork areas.”  Id. at *5.  Notably, though, the policy did state that the restriction is limited to recordings “in the workplace.”

With respect to the policy justifications alleged, the board conducted the following analysis:

  1. Harassment: T-Mobile asserted that its recording prohibition was in place to prevent harassment and noted that, under federal and state laws, employers have an affirmative obligation to prevent harassing conduct. However, the NLRB found that the recording prohibition was not narrowly tailored to this interest.  The board noted that it neither cited laws regarding workplace harassment nor specified that the restriction is limited to recordings that could constitute unlawful harassment.

  1. Confidential information: T-Mobile asserted as an additional justification its interest in protected confidential information in the workplace. The NLRB noted that the employer’s other policies defined “confidential information” as inclusive of employee information such as employee contact information and wage and salary information.  The board also cited Whole Foods and said that the employer’s interest in protecting confidential information was too insufficient to justify the broad prohibition on recording.

While Whole Foods indicated that such policies are not per se unlawful, the T-Mobile decision makes clear that simply inserting business justifications into the policy will not distinguish the lawful from the unlawful.  The board seems to be closely scrutinizing the justifications and requiring detailed explanations thereof.  The decisions in T-Mobile and Whole Foods indicate that the NLRB will also require that a rule carve out recordings that would be considered protected activity under the Act, and it appears – at least for now – that rules which fail to do so will be struck down.  T-Mobile teaches us that, while recording rules are still lawful in some circumstances, the rules must be especially specific with regard to their application and justifications.  Employers should continue to closely monitor NLRB decisions to stay up-to-date on all decisions analyzing employer handbook policies.


NLRB Issues Guidance Regarding Lawful Employee Handbook Policies

Gonzalez Saggio & Harlan LLP

Employers might know (or if they do not, they should) that the National Labor Relations Act (or “NLRA”) applies even to employers who do not have a unionized workforce. Due to the broad reach of the NLRA, the recent guidance issued by the General Counsel of the National Labor Relations Board (“NLRB”) regarding employee handbook policies is a must-read for human resources professionals and those charged with maintaining their company’s employee policies.

The focus of the General Counsel’s “Report” issued on March 18, 2015, arises out of Section 8(a)(1) of the NLRA, pursuant to which the mere maintenance of a rule that has a chilling effect on an employee’s Section 7 activity is unlawful. (“Section 7 activity” is any activity by an employee or group of employees by which they seek to improve their pay and working conditions, regardless of whether or not they are already unionized.) The most important obstacle for employers to consider when drafting and revising their policies, according to the General Counsel, is the fact that policies will be considered unlawful by the NLRB when they would bereasonably construed by employees as restricting Section 7 activity, even if the policies are not designed or intended to have that effect.

The primary recommendation from the General Counsel is that handbook policies include clear and specific language, precise examples, and explanatory context so that employees will not reasonably construe otherwise lawful policies as limiting their Section 7 activity.

An exhaustive recitation of the General Counsel’s extensive examples of lawful and unlawful handbook language goes beyond the scope of this article. However, as a general matter, the General Counsel found that language that provided sufficient context to employees, so as to avoid employees misconstruing the targeted conduct, was the most likely type of policy to meet with NLRB approval.

Again, as with other policies, the use of clarifying examples and context to avoid misinterpretation is highly recommended in the Report.

Regarding confidentiality, for example, handbook policies are considered unlawfully overbroad if they leave employees with the impression they cannot discuss wages, hours, and other terms and conditions of employment with fellow employees and with non-employees. Employers can minimize the risk of creating such an impression by defining terms such as “confidential information,” or by placing confidentiality policies within a context that clarifies their scope, such as within handbook sections addressing trade secrets or patient medical information.

As for employee conduct rules governing action that might include criticism of management (a protected Section 7 activity), the NLRB considers it unlawful for such rules to prohibit merely “rude” or “disrespectful” behavior toward managers or the “company” without sufficient clarification or context. Even false statements cannot be prohibited by a blanket rule (maliciousfalsehoods, however, may be lawfully prohibited). Businesses may nevertheless prohibit disrespectful or unprofessional behavior toward co-workers, clients, and other non-managers – as opposed to the company management – and may generally prohibitinsubordination toward management, as well.

Company media policies, in the meantime, need to be clear that any prohibition on speaking with the media is with respect to anyone purporting to speak on behalf of the employer without authorization. Employees should not be led to believe, whether intentionally or not, that they are in any way limited from speaking with the media regarding their employment in an individual capacity regarding wages, benefits, and other terms and conditions of employment. For example, the General Counsel found lawful a media policy that indicates one person only should speak for the company and that instructs any employee interviewed to state that he or she is not authorized to comment for the employer in response to any reporter inquiries.

The General Counsel looked unfavorably upon employee handbook policies that invoked anti-strike language within policies restricting employee movement to and from work. Such policies should not prohibit “walking off the job,” which can be misconstrued to refer to protected strike actions and walkouts. Phrases like “work stoppage” should also be avoided. The General Counsel, however, found acceptable a policy that simply stated, “Entering or leaving Company property without permission may result in discharge.” But employers must also be careful regarding a requirement of permission before employees can enter property, as employers may not deny off-duty employees access to non-work areas (such as parking lots) unless justified by legitimate business reasons.

As a final example, the General Counsel’s Report indicates that lawful employee policies may prohibit employee activity that amounts to competition against the company or to self-dealing, but a policy may not, under the broad label of a “conflict-of-interest” rule, prohibit any conduct that is not “in the best interest” of the employer because protected Section 7 activity can, of course, be against the interest of the company.

Employers with questions on a particular situation should consult with experienced labor and employment counsel regarding their handbook policies.

NLRB Strikes Down Employee Handbook Language and Issues First Social Media Decision

The National Law Review recently published an article by Doreen S. DavisJonathan C. FrittsRoss H. Friedman, and David R. Broderdorf of Morgan, Lewis & Bockius LLP regarding the NLRB and Social Media:


Continuing its aggressive foray into nonunion workplaces, the NLRB has weighed in on social media and employee handbook issues, finding certain language to be unlawful under Section 8(a)(1) of the National Labor Relations Act.

In September, the National Labor Relations Board (NLRB or Board) issued two decisions confirming that it will now use Section 8(a)(1) of the National Labor Relations Act (NLRA or Act) to find basic (and widespread) handbook and policy language to be unlawful even when it does not involve protected activity under Section 7 of the NLRA. In Costco Wholesale Corp., 358 N.L.R.B. No. 106 (Sept. 7, 2012),[1] the Board reviewed a variety of handbook provisions protecting certain confidential information and found them unlawful under the Act. The Board’s more recent decision in Knauz BMW, 358 N.L.R.B. No. 164 (Sept. 28, 2012),[2] built on the Costco decision and deemed that a rule requiring workplace courtesy violated Section 8(a)(1). The Knauz case is the Board’s first decision in a case involving posts to the social media website Facebook. Given the Board’s expansive interpretation of Section 8(a)(1), it is likely that one or both of these decisions could face appellate court scrutiny in the near future.

Costco Wholesale Case

In its Costco decision, issued on September 7, the Board found that the following policy language was unlawful under Section 8(a)(1) of the NLRA:

  • Prohibiting “unauthorized posting, distribution, removal or alteration of any material on Company property.”
  • Discussing “private matters of members and other employees . . . includ[ing] topics such as, but not limited to, sick calls, leaves of absence, FMLA call-outs, ADA accommodations, workers’ compensation injuries, personal health information, etc.”
  • Disseminating “[s]ensitive information such as membership, payroll, confidential financial, credit card numbers, social security numbers, or employee personal health information.” The policy stated that such information “may not be shared, transmitted, or stored for personal or public use without prior management approval.”
  • Sharing “confidential” information, such as employees’ names, addresses, telephone numbers, and email addresses.
  • Electronically posting statements that “damage the Company, defame any individual or damage any person’s reputation.”

The Board’s decision confirms that even basic policy language common in nonunion workplaces will be struck down if there is a reference to one “inappropriate” item. In this case, a reference to “payroll” information (as in the third bullet above) rendered an entire section unlawful. As a result, employers should carefully review their employee handbooks to avoid an adverse finding by the NLRB.

Knauz Case

Knauz—issued on September 28, three weeks after Costco—involved a nonunion car dealership with a handbook provision stating that

[c]ourtesy is the responsibility of every employee. Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The Board majority found this rule unlawful under Section 8(a)(1) of the NLRA because employees would reasonably view the prohibition against “disrespectful” conduct and the “language which injures the image or reputation of the Dealership” to encompass Section 7 activity. Employees who wished to avoid discipline, according to the majority, would mind this rule in the context of disputes related to wages, hours, or terms and conditions of employment and therefore would be inhibited in exercising NLRA rights. It also is noteworthy that the Board upheld, in a footnote, the administrative law judge’s (ALJ’s) dismissal of the allegation that the dealership fired an employee based on his Facebook postings about an automobile accident at one dealership. These Facebook postings were deemed unprotected under Section 7. The judge had reasoned that the employee posted the information apparently “as a lark, without any discussion with any other employee of the [dealership], and had no connection to any of the employees’ terms and conditions of employment.”

The one Republican NLRB member, Brian Hayes—who was not on the panel for theCostco case—issued a dissenting opinion on Knauz. Member Hayes discussed the Board’s overreach in applying Section 8(a)(1) and cited a great deal of precedent in support. He also signaled that the appellate courts likely would pare back the Board’s recent expansion into the world of employee handbooks and social media policies. Specifically, Member Hayes cited case law holding that the Board must not review policy language in isolation or come up with a theory whereby employees “conceivably could construe [language] to prohibit protected activity,” as opposed to whether they “reasonably would do so.” Member Hayes pointedly argued that the majority’s “analysis instead represents the views of the Acting General Counsel and Board members whose post hoc deconstruction of such rules turns on their own labor relations ‘expertise.'”


While the Acting General Counsel’s view and the views of some ALJs on these issues have been widely publicized, the decisions in Costco and Knauz provide the first look at the Board’s majority view. The law is changing, and handbook language should be reviewed to determine if the language “could be” read to restrict Section 7 activity, even with a strained interpretation. The Acting General Counsel will continue to prosecute these types of cases against nonunion employers, which constitute 93% of all private sector workplaces. While many employers have already reviewed their policy language based on the legal developments in this area over the past several years, as developed by the Acting General Counsel’s three guidance memoranda, the Costco and Knauz decisions provide another opportunity to review policy language in order to minimize the risk of a violation. Notably, unions have and will continue to use handbook policies to threaten and file unfair labor practice charges against an employer at strategic times—including organizing campaigns and collective bargaining negotiations.

[1]. Read the Costco decision at here.

[2]. Read the Knauz decision here.

Copyright © 2012 by Morgan, Lewis & Bockius LLP