NLRB’s Brain-Dump on Lawful Company Policies

New guidance from the National Labor Relations Board should be a big help for companies trying to draft lawful employee handbook policies.

Issued earlier in March by NLRB General Counsel Richard Griffin, the 30-page memo explores several categories of handbook rules, and offers a case-by-case comparison of why the NLRB found certain rules unlawful. “This is really the first time the general counsel has comprehensively reported on the NLRB’s treatment of employer rules and policies under the National Labor Relations Act,” says Frederick Miner, a shareholder with law firm Littler.

The NLRB appears to be concerned that the mere existence of a handbook policy could restrict an employee’s ability to organize or discuss workplace concerns, if employees would “reasonably construe” the language as prohibiting activities protected under Section 7 of the National Labor Relations Act.

“Although I believe that most employers do not draft their employee handbooks with the object of prohibiting or restricting conduct protected by the [NLRA], the law does not allow even well-intentioned rules that would inhibit employees from engaging in activities protected by the Act,” Griffin said in an accompanying statement. Thus, the intent of the guidance is to clarify which handbook rules are acceptable, he said.

The memo should come as welcome news to companies that have been wrestling for awhile now with how to construct lawful handbook rules. “Employers have struggled mightily with trying to read the tea leaves as to what the NLRB might say about a particular policy,” says Daniel Pasternak, a partner with law firm Squire Patton Boggs. With this guidance, employers now have “a glimpse into how the NLRB’s chief prosecutor is making decisions about whether to charge an employer with unfair labor practices based upon their policies,” he says.

Below are a few policy categories discussed in the guidance and examples of lawful and unlawful language cited under each.

Confidentiality Rules

Under Section 7, employees have a right to discuss wages, hours, and other terms and conditions of employment. So any handbook rule that restricts disclosure of employee information would be unlawful.

For example, the NLRB found unlawful a handbook rule that stated: “Do not discuss customer or employee information outside of work, including phone numbers [and] addresses.” In this case, the NLRB took issue with the overbroad reference to “employee information” and the blanket ban on discussing employee contact information.

Generally speaking, rules that prohibit disclosure of confidential information are only lawful where they don’t reference information regarding employees or employee conditions of employment; and where the term “confidential” is not defined in an overbroad manner.

“This is really the first time the general counsel has comprehensively reported on the NLRB’s treatment of employer rules and policies under the National Labor Relations Act.”
Frederick Miner, Shareholder, Littler

For those above reasons, the NLRB also gave several examples of rules prohibiting disclosure that are lawful:

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.

No disclosure of confidential financial data, or other non-public proprietary company information. Do not share confidential information regarding business partners, vendors, or customers.

“The devil is in the details,” Pasternak says. “The board is not going to take the position that an employer doesn’t have the right to protect its legitimate confidential sensitive business information.” What the board does say, however, is that companies should draft a confidentiality policy that narrowly defines what they are trying to protect, he says.

Employee Conduct Rules

Employees also have a right under Section 7 to criticize or protest their employer’s labor policies or treatment of employees. The guidance clarifies that “a rule that prohibits employees from engaging in ‘disrespectful,’ ‘negative,’ ‘inappropriate,’ or ‘rude’ conduct toward the employer or management, absent sufficient clarification or context, will usually be found unlawful.”

Examples of unlawful rules include: do not make fun of, denigrate, or defame your co-workers, customers, franchisees, suppliers, the company, or our competitors; or make no defamatory, libelous, slanderous, or discriminatory comments about the company, its customers, or competitors, its employees or management.

In comparison, rules that require employees to be respectful and courteous to customers, business partners, and other third parties—and do not mention the company or its management—are lawful, because employees cannot construe that as forbidden legally protected criticism of the company. A rule that bans “rudeness or unprofessional behavior toward a customer, or anyone in contact with the company,” for example, is lawful. Similarly, it’s lawful to state that “employees will not be discourteous or disrespectful to a customer or any member of the public while in the course and scope of company business.”

Third-Party Communication Rules

Employees also have a Section 7 right to communicate with the news media, government agencies, and other third parties about wages, benefits, and other conditions of employment. So any rule employees might interpret as banning such protected communications would be unlawful.

LAWFUL V. UNLAWFUL HANDBOOK RULES

The following are excerpts from the National Labor Relation Board’s guidance comparing lawful and unlawful employer handbook rules.
Confidentiality Rule
Unlawful: Never publish or disclose [the employer’s] or another’s confidential or other proprietary information. Never publish or report on conversations that are meant to be private or internal to [the employer].
Lawful: Misuse or unauthorized disclosure of confidential information not otherwise available to persons or firms outside [employer] is cause for disciplinary action, including termination.
Employee Conduct Rules
Unlawful: Do not make statements that damage the company or the company’s reputation or that disrupt or damage the company’s business relationships.
Lawful: Employees will not be discourteous or disrespectful to a customer or any member of the public while in the course and scope of [company] business.
Third-Party Communication Rules
Unlawful: Associates are not authorized to answer questions from the news media…When approached for information you should refer the person to [the employer’s] media relations department.
Lawful: The company strives to anticipate and manage crisis situations in order to reduce disruption to our employees and to maintain our reputation as a high quality company. To best serve these objectives, the company will respond to the news media in a timely and professional manner only through the designated spokespersons.”
Source: National Labor Relations Board.

For example, a rule that bars employees from speaking “to any representatives of the print and/or electronic media about company matters” is unlawful because employees would reasonably construe the phrase “company matters” to encompass employment concerns and labor relations, the guidance stated.

Another rule the NLRB found overbroad: “If you are contacted by any government agency you should contact the law department immediately for assistance.” The NLRB explained this rule is unlawful because employees could reasonably believe that they may not speak to a government agency without management approval, or even provide information in response to an NLRB investigation.

Room for Interpretation

The guidance underscores the increasingly high burden the NLRB is placing on employers “to prevent misunderstandings—even inadvertent misunderstandings—by employees about what is meant in a rule or policy if it could arguably chill protected activities,” Miner says. “The general counsel is challenging even ambiguous workplace rules as being overbroad and, therefore, unlawful.”

The guidance leaves a lot of room for interpretation. “The memo is intended to put the NLRB’s position all in one place, instead of having to read multiple cases and trying to understand the threads that run through them,” says Steve Lyman, a member of law firm Hall Render. The problem is that “the threads that run through them are all over the place. Even this memo is internally confusing,” he says. The NLRB is parsing words so finely that it’s essentially “guesswork” for employers as to whether a particular policy is lawful or not, he says.

“The report really illustrates how expansive the NLRB’s test is for determining lawful rules,” Miner says. “The test can be difficult to apply, and it can be challenging to anticipate when the NLRB will find a rule unlawful.”

Other rules addressed in the guidance deal with conflicts of interest; restrictions on leaving work; restrictions on logos, copyrights, and trademarks; and restrictions on photography, recordings, or personal electronic devices.

A second part of the guidance cites specific rules addressed in an unfair labor practice case against food chain Wendy’s International. In that case, the NLRB found that several of Wendy’s handbook rules violated Section 7. The guidance goes on to explain what rules were approved as part of Wendy’s resolution with NLRB.

Pasternak warns that companies shouldn’t simply assume that their policies will pass muster with the NLRB if they adopt identical lawful rules addressed in this guidance. “It’s by no means the answer to everyone’s problems,” he says. “It’s not a magic bullet, and employers should not interpret it as a magic bullet.”

At the very least, employers need to review the report, including Wendy’s resolution, and then revisit their handbooks to assess which policies could be interpreted as interfering with employees’ Section 7 rights. “They should do that before a challenge comes along in the form of an unfair labor practice charge or otherwise,” Miner says.

Although the NLRB doesn’t have the force of law, Lyman says, “You might as well go with what the NLRB is suggesting to avoid problems down the road.”