NLRB General Counsel Issues Memorandum Providing Justification for Employer Rule Decisions

Introduction

Over the past several years, the National Labor Relations Board (NLRB) has aggressively redefined the landscape for employer rules contained in employee handbooks, employee policies, and/or employment agreements. Even though these decisions purportedly follow the standards established in the Board’s 2004 decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), the application of those standards, first by former General Counsel Lafe Solomon and now under General Counsel Richard Griffin, have led to long-established, commonplace employer rules being found unlawful under the National Labor Relations Act (NLRA). In apparent recognition of this recent sea change by the Board, General Counsel Griffin recently issued a memorandum “to offer guidance on [his] views of this evolving area of labor law.”

Background

As a general rule, under Lutheran Heritage, and the NLRB’s prior decision in Lafayette Park Hotel, 326 NLRB 824 (1998), an employer violates Section 8(a)(1) of the Act through the maintenance of a work rule that would “reasonably tend to chill employees in the exercise of their Section 7 rights.” The Board has developed a two-step inquiry to determine if a work rule would have such an effect. First, a rule is unlawful if it explicitly restricts Section 7 activities. If the rule does not explicitly restrict protected activities, it will violate the Act only upon a showing that (i) employees would reasonably construe the language to prohibit Section 7 activity; (ii) the rule was promulgated in response to union activity; or (iii) the rule has been applied to restrict the exercise of Section 7 rights.

In determining whether employees would reasonably construe language to prohibit protected activity, the Board is required to give the rule a reasonable reading, refrain from reading particular phrases in isolation, and not presume improper interference with employee rights. As acknowledged by General Counsel Griffin in the recently issued memorandum, “the vast majority of violations are found under the first prong of the Lutheran Heritage test.” As a result, the memorandum seeks to provide guidance for that standard, i.e., guidance on rules “employees would reasonably construe” to prohibit Section 7 activity under the Act.

Memorandum Guidance

The memorandum sets forth examples of lawful and unlawful rules for eight categories of rules frequently at issue before the Board, and then reports on specific employer rules that were deemed lawful and unlawful by the Office of General Counsel as part of a settlement agreement. Employer rules addressed by the memorandum include rules regarding (1) confidentiality; (2) employee conduct towards a company and its supervisors; (3) employee conduct towards fellow employees; (4) employee interaction with third parties; (5) use of company logos, copyrights, and trademarks; (6) photography and recording; (7) leaving work; and (8) conflicts of interest. For each category of rules, the memorandum sets forth the following:

• a brief explanation of employees’ Section 7 rights as impacted by such rules,
• the general standards followed by the Board in determining what employers may and may not restrict with respect to each category of rules, and
• examples of lawful and unlawful rules under each category, as previously determined by the Board in its decisions.

 

For example, with respect to confidentiality rules, the memorandum states, “Employees have a Section 7 right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as with nonemployees, such as union representatives.” As such, a rule prohibiting employee discussions about wages, hours, or workplace complaints—or one that employees would reasonably understand to prohibit such discussions—is unlawful. Broad prohibitions on employees discussing “employee” or “personnel” information are also unlawful.  However,

broad prohibitions on disclosing ‘confidential’ information are lawful so long as they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment, because employers have a substantial and legitimate interest in maintaining the privacy of certain business information.

 

The memorandum provides the following examples of unlawful confidentiality rules:

• “Do not discuss ‘customer or employee information’ outside of work, including ‘phone numbers [and] addresses.’”
• “You must not disclose proprietary or confidential information about [the Employer, or] other associates (if the proprietary or confidential information relating to [the Employer’s] associates was obtained in violation of law or lawful Company policy).”
• Employees are prohibited from “[d]isclosing . . . details about the [Employer].”
• “Sharing of [overheard conversations at the work site] with your co-workers, the public, or anyone outside of your immediate work group is strictly prohibited.”
• “Discuss work matters only with other [Employer] employees who have a specific business reason to know or have access to such information. . . . Do not discuss work matters in public places.”
• Confidential Information is: “All information in which its [sic] loss, undue use or unauthorized disclosure could adversely affect the [Employer’s] interests, image and reputation or compromise personal and private information of its members.”

 

On the other hand, the memorandum provides the following examples of lawful confidentiality rules:

• No unauthorized disclosure of “business ‘secrets’ or other confidential information.”
• Misuse or unauthorized disclosure of confidential information not otherwise available to persons or firms outside [Employer] is cause for disciplinary action, including termination.
• Do not disclose confidential financial data, or other non-public proprietary company information. Do not share confidential information regarding business partners, vendors or customers.

 

The memorandum addresses the other categories of rules in a similar fashion. Yet one need only consider the NLRB General Counsel’s discussion of confidentiality rules to understand two problems with the position advocated in the memo: (1) under the Lutheran Heritage standard to determine whether a work rule would reasonably tend to chill employees in the exercise of their Section 7 rights, “would” really means the more speculative “could” in the eyes of the General Counsel; and (2) the “reasonable person” envisioned by the General Counsel under the standard means . . . well, that person has yet to be identified.

Key Takeaways

Whether one agrees or disagrees with the General Counsel’s interpretation of the Lutheran Heritage standard, the recent memorandum has put all employers on notice as to what employer rules this General Counsel will deem lawful. Employers must continue to review and evaluate their work rules and policies to withstand NLRB scrutiny. As acknowledged by General Counsel Griffin, even though “most employers do not draft their employee handbooks with the object of prohibiting or restricting conduct protected by the National Labor Relations Act, the law does not allow even well-intentioned rules that would inhibit employees from engaging in activities protected by the Act.” General Counsel Griffin stated that his goal in issuing the report was “to offer guidance on . . . this evolving area of labor law, with the hope that it will help employers to review their handbooks and other rules, and conform them [to the guidance set forth in the memorandum], if necessary , to ensure that they are lawful.”