The NLRB’s Expanded Agenda

At-Will Employment Disclosures, Social Media Policies and Confidentiality Requirements May Be Illegal

Congress enacted the National Labor Relations Act (NLRA) in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, that Congress felt could harm the general welfare of workers, businesses, and the U.S. economy.[1] Despite the fact that the law applies to almost all employers engaged in interstate commerce,[2] nonunion employers have, historically speaking, paid little attention to the NLRA.

In fact, it is likely that many attorneys have even made the incorrect assumption that the NLRA is only applicable to issues directly relating to unions. Nonetheless, Section 7 of the NLRA protects the rights of all employees covered by the act to engage in “other concerted activities for mutual aid and protection,” which has generally been interpreted as a right to discuss wages, terms and conditions of employment, and working conditions. The law, however, applies to union and nonunion employers alike.

Although the original NLRA created the National Labor Relations Board (NLRB) itself, amendments to the act made the NLRB an adjudicative body charged with deciding charges brought by the NLRB’s general counsel, who is appointed for a four-year term by the president. The duties of the general counsel include prosecuting unfair labor practices while also supervising the NLRB regional field offices.[3] Historically speaking, the general counsel and the NLRB have focused their efforts on prosecuting and adjudicating charges of unfair labor practices, which have generally originated from employers with unionized workforces or union representation cases. This traditional focus has changed in recent years, and the agency has pursued an unprecedented agenda that targets standard employment policies as unlawful based on the agency’s very broad interpretation of the protections afforded by Section 7 of the NLRA.

As part of its expanded agenda to target nonunion employers, the NLRB has initiated a campaign to educate employees about their rights under the NLRA, and it has created a website that specifically seeks to explain what it now believes qualifies as protected “concerted activity” under the law.[4] A number of charges have already been filed with the NLRB as a result of these efforts, and the agency has issued a number of noteworthy decisions that declare standard employment policies unlawful under the NLRA. While the new agenda of the NLRB goes well beyond decisions invalidating workplace rules, the scope of this article will be limited to the rulings that attack standard employment at will disclaimers that are routinely included in employee handbooks, social media policies, and rules requiring confidentiality for internal investigations. These three areas of focus illustrate the agency’s new approach and why attorneys should take note.

I. The Agency Attacks At-Will Employment Disclosures Included in Employee Handbooks as Unlawful

The NLRB has taken the position that certain “at will” employment disclaimers used by employers across the country are unlawful because they interfere with rights guaranteed under Section 7 of the NLRA. Of course, employers routinely rely on disclaimers in employee handbooks and other documentation to confirm that the employment relationship can be terminated at any time by either party. Disclaimers such as these help protect employers from claims that some inadvertent and unintended act or statement made by an agent of the employer could alter the nature of the at-will relationship. Of course, disclaimers such as these have existed for many years, and they have essentially become a standard employment practice. Nonetheless, the agency has recently issued rulings that would likely make many if not most of the at-will disclaimers used by employers unlawful.

The agency targeted a standard employment at will disclaimer in Am. Red Cross Arizona Blood Servs. Region & Lois Hampton, an Individual,[5] where an employee was required to sign an acknowledgement to confirm receipt of and acceptance of all of the terms stated in an employee handbook. The acknowledgement also stated that the employment offered was “at will.” This disclaimer also specifically stated, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.”[6] The general counsel argued that this language was overbroad and discriminatory and infringed on rights protected under Section 7.

The administrative law judge (ALJ) did not find the language of the acknowledgement to be an express restriction on protected activity; hence, the ALJ had to perform a separate analysis to determine whether (1) employees would reasonably construe the language of the disclaimer to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule had been applied to restrict the exercise of Section 7 rights. After evaluating the issue, the ALJ agreed with the general counsel that the disclaimer was unlawful by stating, “In my view there is no doubt that employees would reasonably construe the language [of the acknowledgement] to prohibit Section 7 activity.”[7] In support of this finding, the ALJ noted that the acknowledgement, as written, would reasonably convince an employee that he or she had “waived the right to advocate concertedly … to change his or her at-will status” … “or to engage in any conduct that could result in union representation and in a collective bargaining agreement, which would amend, modify, or alter the “at will” relationship.”[8] This decision made by the ALJ is based on the idea that a reasonable employee would construe the language of the acknowledgement to mean that they could not change their status from at will employment by seeking union representation or by way of collective bargaining. This case settled before it could be decided by the NLRB itself.

The NLRB advanced a similar challenge in Hyatt Hotels Corp. and UNITE Here Int’l Union,[9] where the disclaimer stated as follows:

I understand that my employment is “at will.” This means I am free to separate my employment at any time, for any reason, and that Hyatt has these same rights. Nothing in this handbook is intended to change my at-will employment status. I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either Hyatt’s Executive Vice-President/Chief Operating Officer or Hyatt’s President.

The parties reached a settlement to resolve this case before it could be decided by an ALJ, but the attacks on commonly accepted employment at-will disclaimers caused alarm, and the agency was criticized for its reasoning and approach by many. In an effort to provide some guidance and limit the concern that the agency planned to target all employment at-will disclaimers, the agency issued two Advice Memoranda on Oct. 31, 2012. Both memoranda apply the same reasoning so only one will be addressed herein.

In Rocha Transportation,[10]  the at-will employment acknowledgement stated as follows: “No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.” The general counsel explained that this at-will acknowledgement is lawful because it did not suggest that an employee had waived the right to engage in concerted activity to alter the nature of the employment relationship. To explain the decision, the advice memorandum further notes,

We conclude that the contested handbook provision would not reasonably be interpreted to restrict an employee’s Section 7 rights to engage in concerted attempts to change his or her employment at-will status. First, the provision does not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision simply highlights the Employer’s policy that its own representatives are not authorized to modify an employee’s at-will status. Moreover, the clear meaning of the provision at issue is to reinforce the Employer’s unambiguously stated purpose of its at-will policy: it explicitly states ‘[n]othing contained in this handbook creates an express or implied contract of employment.’ It is commonplace for employers to rely on policy provisions such as those at issue here as a defense against potential legal actions by employees asserting that the employee handbook creates an enforceable employment contract.

The memoranda issued on Oct. 31, 2012, provide employers some guidance that will help employers better understand what at-will employment language the agency finds unlawful, but it is worth noting that the issue has not yet arisen before the actual NLRB. Nonetheless, it is clear that the agency believes that the general rights guaranteed by Section 7 offer broad protections that reach as far as the language of an at-will employment acknowledgment. While the NLRB has provided guidance that will allow employers to adopt new language that could not theoretically be read as a waiver of the right to engage in concerted activity, many if most employers will need to revise their at-will employment acknowledgments in light of this decision.

II. The Agency Strictly Applies Section 7 to Invalidate Most Social Media Policies

The agency has also been waging a war against social media policies adopted by many employers, which the general counsel considers overbroad and in violation of Section 7 rights. As before, if a rule expressly restricts Section 7 protected activity, it violates the NLRA. If it does not expressly violate the NLRA, the rule will only be unlawful if (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.

After the agency issued decisions in a number of cases, the general counsel issued Memorandum OM 12-59 to provide all regional directors guidelines for determining whether a company’s social media policy violates the NLRA. The examples set forth in the memorandum emphasize that social media policies that are broadly worded or ambiguous are unlawful. According to the general counsel, where the language of the policy is ambiguous employees will reasonably construe the rule as a restriction on their right to engage in concerted activity. It is noteworthy that of the 21 pages of example language regarding social media usage policies included in the memorandum, only a few were deemed lawful. The following are examples taken from the advice memorandum that illustrate the approach the agency is taking with respect to such policies.

  • A rule forbidding employees from releasing confidential, guest, team member, or company information was deemed unlawful on the grounds that employees would reasonably construe the language of the rule to prevent them from exchanging information about terms and conditions of employment.
  • A company policy warning employees not to “share confidential information with another team member unless they have a need to know the information to do their job” violates the NLRA according to the memorandum because it is overbroad. The memorandum notes that “employees would construe these provisions as prohibiting them from discussing” topics protected by Section 7.
  • A social media policy instructing employees to treat everyone with respect and stating, “offensive, demeaning, abusive or inappropriate remarks are as out of place online as they are offline” was designated unlawful. The general counsel noted the policy was overbroad because it could be deemed to prevent an employee from criticizing the employer’s policies.
  • One employer policy that required employees who use the social media tools provided by the employer to report any unusual or inappropriate internal social media activity was designated unlawful even where the policy also stated that “it will be administered in compliance with applicable laws and regulations, including Section 7 of the National Labor Relations Act.” The memorandum explains that requiring employees to report anything unusual is essentially requiring employees to report to management the union activities of other employees, and the general counsel notes that even a statement that the employer would comply with Section 7 of the NLRA could not cure the fact that the policy was overbroad.
  • An international health care company’s policy was considered unlawful that informed employees that if they become aware of personal information about fellow employees, . . . customers, patients, etc., that they should not disclose that information online. In support, the memorandum explains that without additional detail employees “would reasonably construe it to include information about employee wages, etc.”
  • The general counsel, however, did approve of a policy that did not impose any actual restrictions on its employees. Instead, the policy merely instructed employees to respect all copying and other intellectual property. The memorandum approves of this employer-drafted recommendation because it did not prohibit employers from doing anything and merely suggested respect. On the other hand, a later section of the rule governing copyright and intellectual property was deemed unlawful because it would require the employee to get the permission of the copyright holder before using any protected materials. This restriction was considered unlawful because it could restrict an employee’s right to take and post photos of employees on a picket line.
  • The NLRB memorandum also found it unlawful for an employer to encourage employees to resolve concerns about work by speaking with co-workers, supervisors, or managers because it might limit an employee from airing his or her grievances online or in a separate medium.

The above examples and others stated in the guidance memorandum suggest that employers cannot adopt any rule that prohibits any form of social media communication unless the employer defines what is restricted with specificity. Based on the examples provided, it appears that the agency has taken a very broad view of what can reasonably be construed as restricting Section 7 rights. In fact, one could argue that the general counsel’s position suggests that any rule that an employee could theoretically construe as restricting Section 7 rights makes that rule unlawful. Regardless of the merits of the position advocated by the agency, the scope of its focus and the strict approach it has taken when it applies the law to such policies further illustrates the agency’s new expanded agenda.

III. Requesting Employees Keep Information Relating to Internal Investigations Confidential May Be Unlawful

Almost all employers understand that it is important to maintain confidentiality during the course of internal investigations. In the absence of confidentiality, it is reasonable to assume that some employees would be reluctant to report theft, discrimination, retaliation, and other forms of wrong doing. Furthermore, the EEOC has emphasized that confidentiality is an important element of any anti-harassment policy.[11] Nonetheless, the NLRB has held, in Banner Health System d/b/a Banner Estrella Medical Center,[12] that an employer that suggests that an employee maintain confidentiality violates the NLRA. The job duties of the employee in Banner included sterilizing surgical instruments using a specific machine that used heat and steam. A broken pipe, however, made this machine inoperable, and the employee’s supervisor told the employee to use a different machine to sterilize the surgical instruments. The employee was concerned that this alternative method might not sufficiently sterilize the instruments, and the employee began researching the issue rather than following instructions. When the supervisor learned that the employee had not followed his instructions the following day, the supervisor warned the employee and suggested that his failure to follow directions would be discussed at a later date. The employee raised the issue with a human resources professional, who asked the employee not discuss the matter with his coworkers while the investigation was ongoing. This request for confidentiality was oral, and the employer did not have a formal written rule that required confidentiality.

The general counsel argued that the confidentiality instruction given by the HR employee had a reasonable tendency to coerce employees and that it constituted an unlawful restraint of Section 7 rights. The ALJ who originally decided the case found that the employer’s desire to maintain the integrity of its investigation by recommending confidentiality qualified as a legitimate business justification that outweighed the infringement of Section 7 rights. The NLRB majority disagreed, finding the employer’s general desire to protect the integrity of its investigation an insufficient business justification.

According to the NLRB, the employer had an obligation to identify a specific rather than general justification before it could infringe on Section 7 rights. The NLRB specifically suggested that to have a legitimate justification to request confidentiality the employer first needed to confirm whether any witnesses needed protection, evidence was in danger of being destroyed, testimony was in danger of being fabricated, or if there was reason to fear a cover up. In short, the decision makes it unlawful for an employer to ask an employee to keep information confidential until the employer has identified a specific need.

IV. The Impact of the Agency’s Expanded Agenda

Whether the NLRB’s aggressive new agenda has been intended to further the pro-union agenda of the Obama administration,[13] or this new focus is merely its effort to remain relevant at a time when only 6.9 percent of private sector employees are represented by unions,[14] the approach has created a number of new subjects for litigation that affect union and nonunion employers alike. On the one hand, the NLRB has broadly interpreted the protections afforded under Section 7 to challenge at-will employment, rules governing social media, and the confidentiality of internal investigations. At the same time, the NLRB has strictly applied Section 7 to limit the ways that employers can attempt to control their workforce. While the agency’s traditional focus has been generally limited to issues that had a more direct connection with labor unions, the agency’s expanded agenda is far more significant, and practitioners should consider the impact of these decisions and recognize that if this trend continues then the NLRB may be a new forum for litigating employment disputes that would not otherwise be actionable under other federal law.

Notes

  1. http://www.nlrb.gov/national-labor-relations-act
  2. The FLSA is not applicable to the federal government, state or political subdivisions, railroads, airlines, or other companies subject to the Railway Labor Act, and several other very specific groups. Certain employees are also exempt, but this issue goes beyond the scope of this article.
  3. As background, the process begins when a charge is filed in one of the NLRB regional offices. The regional office investigates the charge and attempts to resolve the issue in dispute. The regional director has authority either to issue a formal complaint or dismiss the charge. If a complaint is issued, a hearing is conducted by an administrative law judge, who issues findings of fact and a recommendation. This decision from the ALJ is reviewed by the NLRB, which issues a final order. The NLRB can then initiate a case in the U.S. Court of Appeals to seek an order enforcing its order, or the other party to the proceedings can initiate a case in the U.S. Court of Appeals to challenge the NLRB order.
  4. http://www.nlrb.gov/concerted-activity
  5. Am. Red Cross Arizona Blood Servs. Region & Lois Hampton, an Individual, 28-CA-23443, 2012 WL 311334 (Feb. 1, 2012).
  6. Id.
  7. Id.
  8. Id.
  9. Hyatt Hotels Corp. and UNITE Here Int’l Union, 28-CA-061114 (Feb. 29, 2012).
  10. Rocha Transportation, 32-CA-086799, Advice Mem. (Oct. 31, 2012),
  11. http://www.eeoc.gov/policy/docs/harassment.html
  12. Banner Health System d/b/a Banner Estrella Medical Center, 358 N.L.R.B. No. 93 (2012).
  13. Kimberly Strassel, “The Silent Second Term Agenda,” The Wall Street Journal, Aug. 23, 2012.
  14. Bureau of Labor Statistics, Economic News Release, Jan. 27, 2012.

Frank Day FRANK L. DAY is an attorney at Leitner, Williams, Dooley, & Napolitan PLLC in Memphis, where he focuses his practice on employment law related litigation and counseling and other issues that arise from the employer-employee relationship. He serves as a board member for the Memphis/Mid-South Chapter of the Federal Bar Association and holds a leadership position with the Memphis Lawyers’ Chapter of the Federalist Society. He received his law degree from the University of Memphis Cecil C. Humphreys School of Law.