Two New NLRB Decisions Allow Employers to Limit Use of Its Email System and Preserve Confidentiality of Workplace Investigations

Q: What is the current rule on whether an employee can use our company’s email system to distribute union material? Also, are we permitted to require employees to keep workplace investigations confidential without running afoul of the National Labor Relations Act?

A: There are actually two issues that arise from your question, and both were recently addressed by the National Labor Relations Board in its reversal of two Obama-era decisions. Essentially, employers may now beef up restrictions on their employees’ use of company-owned email and other communications systems, subject to certain exceptions. Furthermore, employers may now implement rules requiring confidentiality during the course of workplace investigations, and depending on the circumstances, even beyond the close of the investigation.

In the first case, Caesars Entertainment d/b/a/ Rio All-suites Hotel and Casino, the Board found that an employer’s right to control the use of its email systems supersedes the right of employees to use such systems for union-related communications. This decision overturns Purple Communications, Inc., a much-maligned 2014 decision in which the Board held that workplace rules prohibiting employees from using employer-owned email systems for union business were presumptively invalid. According to the current Board, Purple Communications “impermissibly discounted employers’ property rights in their IT resources while overstating the importance of those resources to Section 7 activity.”

The Caesars Entertainment dispute arose when the union, representing approximately 3,000 employees at a Las Vegas hotel and casino, filed a charge alleging that the employer’s handbook rules violated Purple Communications by prohibiting employees from using the employer’s email system to “send chain letters or other forms of non-business information,” which presumably included union-related emails and other communications. After an administrative law judge rejected the employer’s handbook rule under the Purple standard, the Board issued a call for the parties and interested amici to address several questions, including whether Purple should be overturned, and if so, what standard should replace it. The Board suggested the possibility of returning to the standard introduced in 2007 in Register Guard, where the Board held that employees have no statutory right to use employer equipment.

In a sense, the Board’s rationale for returning to the Register Guard standard is a product of the changes to society at large brought on by technology. As the Board in Caesars explained, employees have other options for union-related communications, given that “in modern workplaces employees also have access to smartphones, personal email accounts, and social media, which provide additional avenues of communication, including for Section 7–related purposes.” As such, the Board found “no basis for concluding that a prohibition on the use of an employer’s email system for non-work purposes in the typical work-place creates an ‘unreasonable impediment’” to employee Section 7 rights. However, the Board recognized that, in certain circumstances, an employer’s email system might be the only viable means of communication among employees. In that case, “an employer’s property rights may be required to yield in such circumstances to ensure that employees have adequate avenues of communication.” The Board declined to clarify the scope of this exception, instead leaving it “to be fleshed out on a case-by-case basis.”

In another case affecting employee Section 7 rights, Apogee Retail LLC, the Board held that a workplace rule requiring employees to maintain confidentiality in the context of an ongoing workplace investigation is presumptively lawful. After the Board’s 2015 decision in Banner Estrella Medical Center, employers were obligated to make a case-by-case determination about whether imposing a particular confidentiality rule during an internal investigation would infringe upon an employee’s Section 7 rights. Reversing that decision, the Apogee Retail Board explained that such confidentiality rules would now be subject to the analysis introduced by the Board in 2017 in Boeing Co., which provided a new standard for determining whether the maintenance of a facially neutral workplace rule is unlawful.

Under Boeing, when analyzing a facially neutral rule that might interfere with the exercise of employee Section 7 rights, the Board considers (1) the nature and extent of the potential impact of the rule on NLRA rights, and (2) the employer’s legitimate justifications for deploying the rule. Following this analysis, the Board places the rule in question in one of three categories—either lawful or unlawful, or somewhere in between. For those rules that present a close call, the Board balances the rule’s effect on employee rights with the employer’s business justifications for the rule.

In Apogee Retail, the workplace rule in question required employees who reported misconduct or otherwise participated in an investigation of such misconduct to maintain confidentiality with respect to the investigation. Employees were warned that violations of the rule could result in disciplinary action. In analyzing the rule, the Board first determined that it, “when reasonably interpreted, would potentially interfere with employees’ exercise of their Section 7 rights” to discuss employee discipline in the workplace “where doing so is not mere griping but rather looks towards group action.” However, when balancing the potential impact on Section 7 rights with the employer’s business justifications, the Board found the employer’s interests outweighed the interests of its employees. Specifically, the employer’s interest in preventing theft and responding quickly to misconduct, as well as in maintaining employee privacy and the integrity of its investigations, benefitted both employers and employees and therefore carried the day.

In addition to finding that it is presumptively lawful for an employer to impose a confidentiality rule during the course of an ongoing investigation, the Board in Apogee Retail took the further step of holding that an employer can impose confidentiality even after an investigation is complete without violating labor laws if its legitimate reasons for requiring confidentiality outweigh the impact on an employee’s Section 7 rights. In other words, rules that extend confidentiality beyond the close of an investigation will be subject to the Boeing analysis.

These two decisions represent a distinct shift away from the Obama-era Board’s positions on these issues. Following Purple Communications, many employers scrambled to rewrite their policies regarding employee email use. Now, after Caesars Entertainment, employers can implement rules that prohibit employees from engaging in any non-work-related use of company technology, unless the use of an employer’s communication systems is the only reasonable means for employees to communicate about union matters. Employers may now require confidentiality during ongoing investigations, although rules that extend confidentiality beyond the close of the investigation will be scrutinized on a case-by-case basis.

In any event, while the more-relaxed standards announced in these two decisions will provide some relief for employers, given the politically mercurial nature of the NLRB, employers may want to file away their Purple and Banner Estrella-compliant policies for future use. As Caesars Entertainment and Apogee Retail illustrate, the Board’s views on any given issue are subject to change with the political winds. As always, it is prudent to consult with a qualified attorney before changing any workplace rules that could impact employee rights under the National Labor Relations Act.

Rogers Stevens

NLRB Issues a Series of Employer-Friendly Decisions

Q.  I heard there have been some significant National Labor Relations Board decisions recently. What do I need to know about them?

A.  Over the past few months, the Board’s Republican majority has issued a series of employer-friendly decisions. They involve various topics, including expansion of employer property rights, classification of workers as independent contractors, and the scope of a proper petitioned-for unit.  These decisions demonstrate it is likely the Board will continue to overturn union-friendly precedent and issue decisions that allow employers more business flexibility.

Below is a summary of some of these key opinions.

Protection of Employer Property Rights Expanded

The Board has issued a series of decisions that expand an employer’s property rights in connection with non-employee union activity. For example, in Bexar County Performing Arts Center Foundation d/b/a Tobin Center for the Performing Arts (368 NLRB No. 46), the Board analyzed whether a property owner violated Section 8(a)(1) of the National Labor Relations Act (NLRA) by barring the off-duty employees of an on-site contractor from leafleting on its property.

The majority determined that contractor employees generally are not entitled to the same Section 7 access rights as the property owner’s own employees. In reaching this decision, the Board adopted a new standard, holding that a property owner may exclude from its property off-duty employees of an on-site contractor seeking access to the property to engage in Section 7 activity unless (1) those employees work both regularly and exclusively on the property, and (2) the property owner fails to show that they have one or more reasonable alternative means to communicate their message without trespassing on the employer’s property (i.e. use of adjacent public property, newspapers, radio, television, billboards, and social media).

Soon after the Bexar County decision, the Board went a step further in Kroger Limited Partnership I Mid-Atlantic (368 NLRB No. 64), ruling that businesses may lawfully limit the rights of non-employee union supporters to access company property that otherwise is open to the public.  Specifically, it found that Kroger did not violate the NLRA when it removed non-employee union supporters from the parking lot of a Kroger store even though the store permitted civic and charitable organizations to solicit and distribute in the parking area and in front of the store.

In reaching this decision, the Board noted that based on precedent, to establish that a denial of access to non-employee union agents was unlawful, a party must prove that an employer denied access to other non-employee union agents while allowing access to other non-employees for activities similar in nature to those in which the union agents sought to engage. The majority further stated that, consistent with this standard, an employer may deny access to non-employees seeking to engage in protest activities on its property while allowing non-employee access for a wide range of charitable, civic, and commercial activities that are not similar in nature to protest activities.  The Board found that Kroger’s actions were lawful because Kroger had a fundamental property interest in its premises that allowed it to exclude the Union’s solicitor and because the Union’s solicitations were not sufficiently similar in nature to other on-premises charitable, civic or commercial activities that Kroger had previously allowed.

These decisions are demonstrative of the trend toward allowing an employer greater flexibility to regulate non-employee access to the employer’s property under the NLRA. In light of these decisions, employers may distinguish between non-employee activities they will allow and will not allow on their premises.

Worker Misclassification Not a Violation

Proper classification of workers is a fundamental issue under federal labor laws because only statutorily defined “employees” are covered under the NLRA. Under Section 2 of the Act, independent contractors are specifically excluded from the protections afforded to employees.   Employee vs. independent contractor classification issues often arise in the context of determining who is eligible to vote in a union election and in evaluating whether certain workers are protected by Section 8(a)(1) of the NLRA.

In Velox Express, Inc. (368 NLRB No. 61), the Board addressed whether an employer’s misclassification of drivers as independent contractors was a violation of Section (8)(a)(1).  Velox Express operated a courier service and engaged drivers that it classified as independent contractors.  It terminated one of its drivers who, in turn, filed an unfair labor practice charge with the NLRB contesting the lawfulness of her discharge and alleging that her former employer also violated the NLRA by misclassifying her and her coworkers as independent contractors.

The full Board unanimously adopted the Administrative Law Judge’s conclusion that Velox Express failed to establish that its drivers are independent contractors. However, the Board reversed the judge and dismissed the allegation that Velox Express independently violated Section 8(a)(1) by misclassifying its drivers as independent contractors.  It held that an employer’s misclassification of its employees as independent contractors, standing alone, does not violate the NLRA.  The Board explained that an employer’s communication to its workers of its legal opinion that they are independent contractors does not, in and of itself, inherently threaten that those employees are subject to termination or other adverse action if they exercise their Section 7 rights or that it would be futile for them to engage in union or other protected activities.  The communication of that legal opinion is therefore privileged by Section 8(c) even if the employer is ultimately mistaken.

This case is one of a few recent case developments by the Board which positively affects employers faced with independent contractor issues. It demonstrates that this current Republican majority does not disfavor independent contractor relationships.  As a result of this decision, employers who genuinely believe their workers to be independent contractors may share that belief with their workers, even if it ultimately turns out to be wrong, without fear of being prosecuted by the Board’s General Counsel, provided the statements are not expressly or implicitly linked to the workers’ engaging in NLRB protected activities.

Limits to “Micro-Unit” Strategy

In The Boeing Company (368 NLRB No. 67), the Board clarified the traditional community-of-interest test for determining whether “micro-units” of employees within a larger workforce can organize on their own.   In that case, the union attempted to utilize a “micro-unit” strategy to target a petitioned-for unit made up of only two job classifications from a significantly larger workforce.  The Board concluded that the petitioned-for unit was not an appropriate unit for purposes of conducting a union election.

The Board set forth a clarifying, three-step analysis for determining whether a petitioned-for unit is appropriate. Under that analysis, the Board will consider:

  • Whether the members of the petitioned-for unit share a community of interest with each other;
  • Whether the employees excluded from the unit have meaningfully distinct interests in the context of collective bargaining that outweigh similarities with unit members; and
  • Guidelines the Board has established for appropriate unit configurations in specific industries.In reaching its decision, the Board found that the mechanics in the petitioned-for unit did not share an internal community of interest and did not have sufficiently distinct interests from those employees excluded from the petitioned-for unit. The Board also concluded that there were no appropriate-unit guidelines specific to the employer’s industry.This decision is an indication that smaller units will face increased scrutiny and may be easier for employers to challenge.

Leigh McMonigle

NLRB to Issue New Rules on Whether Student Workers Can Unionize

Q.  Are students who work in connection with their studies considered to be “employees” and therefore able to unionize?

A.  In a significant development for private colleges and universities, the National Labor Relations Board (NLRB) announced that it intends to propose rules that would establish a “standard for determining whether students who perform services at private colleges or universities in connection with their studies are ‘employees’” under the National Labor Relations Act (NLRA). The NLRB currently projects that the proposed rules will be issued in September 2019. It is widely expected that the rules, which will be proposed by the Republican-controlled Board, will make it more difficult for students to be classified as “employees” for the purpose of forming unions.

For more information, click here.

Christopher J. Moran & Lee E. Tankle

NLRB Provides Updated Guidance on Employer Policies and Handbooks

Q:        How does the current National Labor Relations Board view employee handbook policies?

A:        Under the Trump administration, the National Labor Relations Board (“Board”) has shifted in a more employer-friendly direction, including with respect to workplace policies.  In a December 2017 decision, the NLRB reassessed the standard for evaluating when neutral workplace rules violate the National Labor Relations Act (NLRA). In that decision, the Board defined three categories of employer handbook rules and policies: (1) rules that are generally lawful; (2) rules that warrant individualized scrutiny; and (3) rules that are plainly unlawful.

Those three categories were expanded in June 6, 2018, when the Board’s General Counsel issued a new Guidance Memorandum (18-04), providing updated guidance on how regional NLRB offices should investigate unfair labor practice charges involving employer handbook language and rules.

Category 1 Rules:  The Board has determined that employee handbook policies in this category generally are lawful, either because the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights, or because the potential adverse impact on protected rights is outweighed by the business justification associated with employer policy.  The examples provided in the Guidance Memorandum of the types of rules that fall into this category include:

  • Civility rules prohibiting “disparaging, or offensive language”;
  • No-photography and no-recording rules;
  • Rules against insubordination, non-cooperation, or on-the-job conduct that adversely affects operations;
  • Disruptive behavior rules (for example, prohibiting conduct that creates a disturbance on company premises or creates discord with clients or fellow employees);
  • Rules protecting confidential, proprietary, and customer information or documents;
  • Rules against defamation or misrepresentation;
  • Rules against using employer logos or intellectual property;
  • Rules requiring authorization to speak for the company; and
  • Rules banning disloyalty, nepotism, or self-enrichment.

Category 2 Rules:   The Board has concluded that Category 2 rules are not “obviously lawful or unlawful, and must be evaluated on a case-by-case basis to determine whether the rule would interfere with rights guaranteed by the NLRA, and if so, whether any adverse impact on those rights is outweighed by legitimate justifications.” The Guidance Memorandum provides examples of rules that fall into this category, including the following:

  • Broad conflict-of-interest rules that do not specifically target fraud and self-enrichment and do not restrict membership in, or voting for, a union;
  • Confidentiality rules broadly encompassing “employer business” or “employee information” (as opposed to confidentiality rules regarding customer or proprietary information, which would be considered lawful, or confidentiality rules more specifically directed at employee wages, terms of employment, or working conditions, which is prohibited);
  • Rules regarding disparagement or criticism of the employer (as opposed to civility rules regarding disparagement of employees, which is considered a lawful Category One rule);
  • Rules regulating use of the employer’s name (as opposed to rules regulating use of the employer’s logo/trademark, which is allowed as a Category One rule);
  • Rules generally restricting speaking to the media or third parties (as opposed to rules restricting speaking to the media on the employer’s behalf, which is a lawful Category One rule );
  • Rules banning off-duty conduct that might harm the employer (as opposed to a rule banning insubordinate or disruptive conduct at work, which is a permitted Category One rule, or a rule specifically banning participation in outside organizations, which is an unlawful Category Three rule); and
  • Rules against making false or inaccurate statements (as opposed to lawful rules against making defamatory statements).

Category 3 Rules: The Board has found that rules in this category are generally unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on the rights guaranteed by the NLRA outweighs any justifications associated with the rule. The examples provided in the Guidance Memorandum of the types of rules that fall into this category include:

  • Confidentiality rules specifically regarding wages, benefits, or working conditions (such as a rule prohibiting employees from disclosing salaries and contents of employment contracts); and
  • Rules against joining outside organizations or voting on matters concerning the employer.

The Memorandum also advises the regional NLRB offices that they should no longer find unlawful any rule that could be interpreted as covering Section 7 activity and should now focus on whether the rule in question would actually be interpreted to cover Section 7 activity. The Memorandum instructs regional offices that “ambiguities in rules are no longer interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included.”

Takeaways

The Board has moved significantly in the direction of limiting its influence over employer handbook policies. Whether a particular employer rule is lawful, however, may rest on subtle differences in policy language. Moreover, the Guidance Memorandum does not provide an exhaustive list of all lawful and unlawful handbook policies. For assistance in ensuring that your handbook rules do not impinge on employee rights to engage in concerted activity, we recommend consulting with labor and employment counsel.

Leigh McMonigle

 

Another Reset of NLRB’s Independent Contractor Test

Q.  What is the current standard for determining whether an individual is an employee or independent contractor for purposes of the NLRA?

A.   On Jan. 25, 2019, the Republican-led National Labor Relations Board affirmed the acting regional director’s decision that drivers of a shared airport ride service were independent contractors, not employees, and therefore not covered by the National Labor Relations Act.

The decision, which reverts back to the common law test for determining independent contractor status, will have a wide-ranging impact on other gig economy companies.

To read the full article, click here.

-Tracey E. Diamond and Susan K. Lessack