Court Finds Provision Barring Fraternization Among Workers Violated Federal Law

A federal appellate court recently held that three rules contained in an employee handbook violate the National Labor Relations Act. According to the court, the rules discourage employees from engaging in “protected activity” under the Act. Guardsmark, LLC v. NLRB, No. 05-1216, U.S. Court of Appeals for the District of Columbia Circuit (February 2, 2007).

Factual Background

Guardsmark is a nationwide company that provides security guard services. The company distributes a handbook to all uniformed employees. Three of the handbook provisions were scrutinized: 1) a chain-of-command rule telling employees “not [to] register complaints with any representative of the client”; 2) a rule prohibiting solicitation and distribution of literature “at all times while on duty or in uniform”; and 3) a rule prohibiting employees from “fraterniz[ing] on duty or off duty” with other employees.

The Service Employees International Union filed unfair labor practice charges with the National Labor Relations Board (NLRB) alleging that all three rules violate Section 8(a)(1) of the Act. Section 8(a)(1) prohibits employers from “interfer[ing] with, restrain-[ing], or coerc[ing] employees in the exercise [of their Section 7 rights].” In turn, Section 7 protects the rights of employees to self-organize, form, join or assist a labor organization.

The NLRB’s General Counsel issued a complaint alleging that Guardsmark’s rules discouraged protected labor activity. Guardsmark argued that the chain-of-command rule applies only while employees are on duty, that the solicitation rule does not apply to off-duty employees in uniform who cover up the company insignia, and that the fraternization rule targets only personal entanglements that “could cloud [a worker’s] judgment.”

Legal Background

The administrative law judge (ALJ) agreed with the NLRB General Counsel as to the chain-of-command rule, noting that it prevents employees from seeking client assistance regarding any aspect of their employment. With respect to the other rules, however, the ALJ agreed with Guardsmark. According to the ALJ, the solicitation rule clearly communicates to employees that they may not engage in unofficial activity while in uniform. The ALJ concluded that the fraternization rule also does not violate federal law because it is designed “to insure the protection of individuals and property.”

On appeal, the NLRB agreed with the ALJ’s conclusion with respect to the chain-of-command rule and the fraternization rule. The NLRB disagreed with the ALJ regarding the solicitation rule, however, concluding that employees would not reasonably construe the rule to include a “safe harbor” for “removing or covering their uniforms [while soliciting off duty in order to] com[ply] with this provision.” Both Guardsmark and the union asked the D.C. Circuit Court of Appeals to review the NLRB’s decision.

Legal Analysis

To determine whether a work rule violates federal labor law, the D.C. Circuit first noted, it must consider “whether the rule would reasonably tend to chill employees in the exercise of their statutory rights.” Relying on the chain-of-command rule forbidding complaints to clients, the court affirmed the NLRB’s decision. “Because [e]mployees have a statutorily protected right to solicit sympathy, if not support, from the general public . . . [and] customers regarding their terms and conditions of employment,” the court wrote, “the Board’s conclusion that the chain-of-command rule explicitly prohibits [S]ection 7 activity is reasonably defensible.”

Turning to the solicitation rule, the D.C. Circuit noted that the company failed to communicate the safe harbor clarification to all employees who received the handbook. Moreover, the court found that the plain language of the rule can be read to bar solicitation and distribution at all times when employees are on duty whether in or out of uniform and at all times while employees are in uniform whether on or off duty. “[B]ecause the Board presumes that a rule prohibiting employee solicitation, which is not by its terms limited to working time, would [explicitly] violate [Section] 8(a)(1),” the court held, “the Board’s conclusion that the rule violates the Act is reasonably defensible” as well.

Finally, the D.C. Circuit addressed the fraternization rule. Disagreeing with the Board, the court found that employees could not reasonably engage in protected activity without
fraternizing with each other. Even if Guardsmark could justify the 24-hour ban, the court continued, the company had an obligation to demonstrate its inability to achieve its goal of avoiding personal entanglements with a more narrowly tailored rule that would not interfere with protected activity. Because it failed to do so, the court refused to enforce the Board’s order with respect to this rule.

Practical Impact

This case reminds both union and non-union employers to be extremely careful when drafting handbook provisions. In the case of both the solicitation and fraternization rules, the court’s decision was based on the exact phrasing used in Guardsmark’s handbook. For example, the court found that since Guardsmark’s “rule already bars dating and becoming overly friendly with” clients and co-workers, a reasonable employee might think that this “prohibition on fraternizing must apply to something else.” As noted by the court, removing the word “fraternize” or making an exception for protected activity may be viable alternatives.

Note: This article was published in the February/March 2007 issue of The Employment Law Authority.

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