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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.

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.

We wrote recently about the Trump Administration’s efforts to roll back the Obama-era NLRB’s workplace handbook and rule restrictions. It’s time to update you further on where that effort stands.

As a reminder, the Obama NLRB held in December 2017 in The Boeing Company case that facially-neutral employment policies and rules will now be classified into one of three categories:

  • Category 1 includes policies that are legal in all cases since they can’t reasonably be interpreted as interfering with workers’ rights or because any interference is outweighed by business interests.
  • Category 2 includes policies that are legal in some cases, depending on their application.
  • Category 3 includes policies which are generally always unlawful.

The fact that legitimate business justifications associated with workplace rules would be given more weight when being evaluated by the NLRB was positive news for employers. What was still to be seen was how these categories would be applied to real cases.

A decision issued by an Administrative Law Judge last month gives us more insight on how the Board will apply these categories going forward. The case is Lowe’s Home Centers, LLC, Case No. 19-CA-191665 (NLRB 2018). The case involved a challenge to a provision of the company’s Code of Business Conduct and Ethics which included a section on “Confidential Information,” that stated:

Employees must maintain the confidentiality of information entrusted to them by Lowe’s or its suppliers or customers, except when disclosure is authorized by Lowe’s General Counsel and Chief Compliance Officer or disclosure is required by law, applicable governmental regulations or legal proceedings. Whenever feasible, Employees should consult with the company’s General Counsel and Chief Compliance Officer before disclosing confidential information if they believe they have a legal obligation to do so. Confidential information includes all non-public information that might be of use to competitors of the company, or harmful to Lowe’s, its suppliers or customers, if disclosed. It includes all proprietary information relating to Lowe’s business such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records and salary information.

The provision’s reference to “salary information,” caused the challenge, but the company argued that its rule did not prevent employees from discussing salary information with each other (which is protected by Section 7 of the National Labor Relations Act), but referred instead to situations involving a person entrusted with non-public information relating to the company, and also that its business justifications for the rule outweighed employees’ Section 7 rights.

The ALJ did not look favorably on this Code provision or the company’s arguments. Her ruling held that the “provision may be read to preclude employees from discussing their salary information with one another, as well as non-employees such as union representatives and Board agents, which the Board has found to infringe on employees’ Section 7 rights to discuss terms and conditions of their employment with others.” Further, the ALJ emphasized that “[e]mployee discussions regarding wages, the core of Section 7 rights, are ‘the grist on which concerted activity feeds,’” and that “the Board has consistently held that rules or provisions which prohibit employees from discussing wages are unlawful.”

The ALJ explained that rules prohibiting employees from discussing salary information are per se unlawful (falling in Category 3), obviating the need to even conduct a balancing test (as would relevant with Category 1 or 2). Even if a balancing test were used, the ALJ found that the adverse impact on the employees’ Section 7 rights outweighed the company’s asserted business justifications. So, the company was ordered to rescind the unlawful policy and to notify employees of the change.

The lesson for employers here is that existing policies need to be carefully reviewed and new policies scrutinized even considering the Board’s current, more employer-friendly analysis. This case shows us that something as seemingly innocuous as the definitions section of an employee policy can still cause an employer significant problems.

For the past several years, folks in the HR space have had to pay special attention to the language in their handbooks and employment policies out of fear of violating rules established by a series of decisions from the National Labor Relations Board (NLRB). Those decisions established a tough standard for evaluating facially neutral employment policies that complied with their interpretations of labor law. Combined with an aggressive NLRB enforcement strategy, employers have understandably been on edge with respect to their workplace rules and policies.

Under that standard, the NLRB found that employers violated the National Labor Relations Act (NLRA) by maintaining workplace rules that did not explicitly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities, if the rules would be “reasonably construed” by an employee to prohibit the exercise of his or her NLRA right to engage in “protected, concerted activity.”

On December 14, 2017, however, the NLRB replaced that standard with a new one. In The Boeing Company, 365 NLRB No. 154 (2017), the NLRB established a new test for workplace rules and policies:  when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the NLRB will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.

This standard is much more favorable to employers. Many policies which would have violated the previous standard will now be considered appropriate and lawful.

Additionally, the NLRB also announced three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions:

  • Category 1: This will include rules that the NLRB designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, 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. (An example of a Category 1 rules is the no-camera requirement maintained by Boeing in the case.)
  • Category 2: This will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
  • Category 3: This will include rules that the NLRB will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.

In the Boeing case, the NLRB concluded that Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit.  The NLRB explained that the rule potentially affected the exercise of NLRA rights, but that the impact was comparatively slight and outweighed by important justifications, including national security concerns.

Overall, while employer policies and rules must still be evaluated to ensure compliance with the NLRA, such policies and rules will now be judged under much less stringent standards than they have been for the past several years, which is very good news indeed for employers.