A challenging year

NLRB has issued significant rulings favoring employees during the past year

There have been several significant legal developments this year from the National Labor Relations Board (NLRB) broadly affecting a variety of employment-related issues, including union elections, at-will employment, mandatory arbitration agreements and an employee's right to engage in protected concerted activity via social media.

These issues all revolve around whether such activities comply with the National Labor Relations Act (NLRA), which makes it an unfair labor practice for employers to interfere with or restrain employees' rights to engage in concerted activities for their mutual aid and protection. Keeping abreast of these and future NLRB developments is essential for you to minimize your liability resulting from such claims.

"Quickie" election rule

On Dec. 22, 2011, NLRB published a highly controversial new rule significantly reducing the time between the filing of a representation petition and the holding of an election, giving employers little time to educate employees about their rights and possible risks of unionization. The new rule also brought about other union-friendly changes, including significant changes to the procedure for challenging the voting unit. The new rule went into effect April 30.

However, on May 14, in Chamber of Commerce v. NLRB, the U.S. District Court for the District of Columbia held NLRB's new "quickie" election rule was unenforceable. The district court reasoned NLRB lacked the three-member quorum required to issue the new rule. However, the district court made clear its decision "need not necessarily spell the end of the final rule for all time" and a validly constituted NLRB quorum may decide to adopt the same rule.

As a result of the court's invalidation of the new rule, NLRB temporarily suspended the rule's implementation. But NLRB is free to reissue the same rule after properly constituting a valid quorum.

One thing remains clear: NLRB's "quickie" election rule is not likely to go away, and you are well-advised to stay informed of developments in this area. In particular, be far more proactive in advance of any representation petition and educate employees regarding the effects of union representation.

At-will employment provisions

For decades, union and open-shop employers have routinely included at-will employment provisions in their employee handbooks and other employment documents, ensuring employees know their employment relationships were terminable at will by either party. Recently, in American Red Cross Arizona and Lois Hampton and Hyatt Hotels Corporation and Unite Here International Union, Region 28 of NRLB, located in Arizona, attempted to outlaw this common practice by finding such at-will provisions unlawful under the NLRA.

As part of an unjust termination case brought by Lois Hampton and NLRB, Administrative Law Judge Gregory Meyerson held the American Red Cross Arizona Blood Services Region maintained a prohibitively "overly broad and discriminatory" statement regarding the at-will section of its employee handbook. The acknowledgement section of the employee handbook stated the at-will employment relationship could not be altered without the signatures of the employee and either the executive vice president and/or president or chief operating officer of the American Red Cross.

According to Meyerson, such language essentially constituted a waiver by employees of their right to engage in concerted activities to change their at-will employment status. In addition to ordering Hampton be reinstated and her record expunged, the judge ordered the American Red Cross to post explicit language reinforcing employees' rights to engage in concerted activities.

In a second case, the UNITE HERE International Union and NLRB alleged a similar at-will provision in the acknowledgement section of an employee handbook also was "overly broad and discriminatory." The statement read: "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 VP/Chief Operations Officer or Hyatt's President."

The parties entered into a settlement agreement resolving the complaint. In the agreement, Hyatt agreed to rescind and revise the sections of its employment agreement that purportedly amounted to an unfair labor practice, including the at-will provision. Hyatt also agreed to post notices of the changes to the agreement, provide employees with revised inserts for their employee handbooks, and revise and rescind any existing employee acknowledgement forms.

Although these controversial cases have arisen exclusively in NLRB's Region 28, they reflect NLRB's new stance toward at-will provisions. Indeed, Lafe Solomon, acting NLRB general counsel, announced at-will employment provisions that restrict modification of the at-will employment relationship exclusively to a written statement approved by a senior company official violate the NLRA. Solomon reasons such provisions are unlawful because they may cause employees to believe union representation and collective bargaining could not alter their at-will employment status, thereby discouraging concerted activities.

You should carefully examine at-will provisions in employment documents for compliance with the NLRA. One possible option is to include language that states the at-will provision does not affect employees' ability to bargain collectively and engage in concerted activities regarding the terms and conditions of their employment under the NLRA. At a minimum, stay informed of developments in this new area, which promises to result in costly NLRB litigation.

Mandatory arbitration agreements

To avoid costly litigation, many employers require employees to sign arbitration agreements in which employees agree to arbitrate, rather than litigate, employment-related claims and waive their rights to pursue such claims as part of a class action. Recently, the validity of class action waivers has attracted widespread attention. In 2011, in AT&T Mobility v. Concepcion, the U.S. Supreme Court upheld a class action waiver included in a consumer contract that required customers to individually arbitrate their claims.

This year, NLRB addressed whether a mandatory arbitration agreement that prevents employees from joining to file employment-related claims violates the NLRA. In D.R. Horton, Inc. and Michael Cuda, NLRB held the employer violated the NLRA by requiring its employees to sign an agreement precluding them from filing in any forum—arbitral or judicial—joint, class or collective claims relating to wages, hours or other working conditions.

In this case, the employer, D.R. Horton, required its employees to sign a mutual arbitration agreement as a condition of employment. The agreement required all employment-related disputes be resolved through arbitration and that the arbitrator could only hear an individual employee's claims and did not have the authority to consolidate other employees' claims. The agreement also required the employee to waive the right to file a lawsuit.

Michael Cuda worked as a superintendent for D.R. Horton. Cuda had signed the agreement as a condition of his employment. Cuda believed D.R. Horton was misclassifying superintendents as exempt employees under the Fair Labor Standards Act. Cuda's attorney notified D.R. Horton of the intent to initiate arbitration on behalf of Cuda and a nationwide class of superintendents. In response, D.R. Horton argued the agreement barred arbitration of collective claims. Cuda filed an unfair labor practice charge with NLRB alleging D.R. Horton violated the NLRA by maintaining the agreement. NLRB agreed.

NLRB began its analysis by discussing the employee rights protected by the NLRA. The NLRA was enacted to allow employees to join together to assert their legal rights to improve workplace conditions and remedy workplace wrongs. Section 7 of the NLRA provides employees have the right "to engage in … concerted activities for the purpose of collective bargaining or other mutual aid or protection." NLRB stated the NLRA protects employees' right to join together to pursue workplace grievances through litigation and that Section 7 protects concerted legal action addressing wages, hours or working conditions. Therefore, an individual who files a class or collective action regarding wages, hours or working conditions, either in court or through arbitration, is engaging in conduct protected by Section 7.

NLRB held the agreement clearly prohibited employees from exercising rights protected by Section 7. As a result, the agreement violated Section 8(a)(1) of the NLRA, which makes it an unfair labor practice for an employer to interfere with, restrain or coerce employees in the exercise of their Section 7 rights.

NLRB specifically addressed and rejected the argument that its holding was inconsistent with the Supreme Court's opinion in AT&T Mobility v. Concepcion. NLRB explained the AT&T Mobility case was distinguishable because it involved the waiver of a consumer class action and, therefore, did not involve the waiver of rights protected under the NLRA. Furthermore, the AT&T Mobility case involved a conflict between a federal statute and state law, thereby invoking the Supremacy Clause, whereas the D.R. Horton case only involved two federal statutes.

Finally, NLRB noted the limited nature of its decision, which provided only that employers may not require employees to waive their rights under the NLRA to collectively pursue litigation of employment claims in all forums (arbitral and judicial). NLRB stated the employees' NLRA rights are protected without requiring the availability of classwide arbitration if an employer permits a judicial forum for class and collective claims. In addition, employers may require arbitration to be conducted individually. NLRB made clear an agreement requiring an employee to arbitrate individual employment-related claims but does not preclude a judicial forum for class or collective claims would not violate the NLRA.

Although this case is certainly unfavorable for employers, it is probably not the final word on the issue. It remains to be seen whether courts will uphold the D.R. Horton decision.

In the meantime, if you have class or collective-arbitration provisions, consider suspending their application until the courts have had their say on the issue. Of course, consider drafting employment agreements that comport with the D.R. Horton decision. Above all, make sure employees understand they are not required as a condition of their employment to waive their right to maintain employment-related class or collective actions in all forums or to file charges with NLRB.

Social media

The popularity of social media in recent years has skyrocketed with seemingly exponential growth in the number of people regularly posting comments about their personal lives. Social media provides employees with an unprecedented platform to give their opinions about their employers and jobs. Employers are struggling to understand the effect of these sites on the workplace and are grappling with what kind of response is legal and appropriate.

Employees' online postings on social media sites regarding their working conditions may qualify as protected concerted activity under the NLRA. As a result, NLRB has scrutinized employers who restrict employees' use of social media or discipline employees for their postings on social media sites.

Although the law concerning social media is in the early stages of development, NLRB is starting to shed more light on what conduct is acceptable under the NLRA.

To provide additional guidance, NLRB acting general counsel issued three reports concerning social media. The first and second reports, issued Aug. 18, 2011, and Jan. 24, 2012, focus primarily on NLRB case developments regarding whether employers could take disciplinary action against employees for posting critical comments about employers. The reports confirm NLRB's position that, in certain circumstances, employees' postings were protected concerted activity and employers' social media policies were invalid because they deterred employees from engaging in such activity.

On May 30, 2012, NLRB issued its third social media report. The report focuses exclusively on social media policies and whether such policies were lawful under the NLRA. NLRB reviewed policy provisions on a variety of topics, and the same familiar themes appeared.

In the report, NLRB makes clear employers violate the NLRA if they maintain a work rule that would reasonably tend to chill employees in the exercise of their rights under the NLRA.

For example, NLRB found the policy provision "don't release confidential guest, team member or company information" to be unlawful. NLRB explained employees have the right to discuss wages and conditions of employment with third parties and each other. Employees could reasonably interpret this provision to prohibit them from discussing and disclosing information regarding their terms and employment conditions. NLRB also held employers could not require employees to check with them before posting information on social media sites. In so holding, NLRB struck down a policy provision that instructed employees who are unsure whether their posting is prohibited to check with the employer. NLRB stated any policy that requires employees to secure permission from an employer as a precondition to engaging in protected concerted activity violates the NLRA.

The report also confirms NLRB's position that vague or overbroad policies are unlawful. For example, NLRB found a policy provision that prohibited employees from posting information regarding their employer on any social networking sites that could be deemed "material nonpublic information" or any information that is considered "confidential or proprietary" was unlawful. NLRB reasoned the term "material nonpublic information" in the absence of clarification was so vague employees could reasonably construe it to include subjects that involve their working conditions. In addition, the terms "confidential or proprietary" were overbroad because they could reasonably be interpreted to include information concerning employment terms and conditions.

NLRB reinforces its position from the first and second reports that employers cannot prohibit employees from posting critical comments about their employers. NLRB invalidated a policy provision that advised employees to avoid harming a company's image. NLRB reasoned the provision was unlawfully overbroad because it prohibited protected criticism of an employer's labor policies or treatment of employees.

NLRB also cautions that employers cannot control whether employees are connected with each other on social media sites. For example, NLRB held an employer's policy provision that instructed employees to think carefully about "friending" co-workers on social media sites was overbroad. The provision would discourage communications between co-workers, thereby interfering with protected activity under the NLRA. NLRB also pointed out the provision did not include limiting language so employees could understand it does not restrict protected activity.

Employers are placed in a precarious situation when trying to strike the appropriate balance between protecting their workplaces while respecting their employees' right to discuss their personal lives (and generally engage in protected conduct under the NLRA) on social media sites. To minimize your liability, have a well-crafted, up-to-date social media policy that sets clear guidelines and expectations for employees, but is not so broad as to interfere with employees' rights under the NLRA. If you already have social media policies, review the policies in light of NLRB's third report.

When preparing a social media policy, keep the following guidelines in mind:

  • A social media policy should be tailored specifically to your work force and company.
  • The policy should define social media so employees are aware of the policy's scope.
  • The policy should encourage respectful communications.
  • The policy cannot prohibit employee postings about work-related matters or the terms and conditions of employment even if such discussions are critical or negative toward the employer. If you prohibit certain employee conduct on social media sites, such prohibitions should be crafted as narrowly as possible.
  • To avoid claims of overbreadth or ambiguity, provide as many examples as possible to ensure employees will not interpret the policy as prohibiting protected activity under the NLRA.

In addition, the policy should remind employees the employer's other policies, including anti-harassment and anti-discrimination policies, also apply to employees' social media activities. The policy should instruct employees that workplace technology and time are designed for work and not personal use. Finally, the policy should include a disciplinary component. The policy must be regularly reviewed and updated to reflect new social media developments.

Remember, for a social media policy to work, employees need to be aware of and understand the policy. Accordingly, provide proper training for employees about the policy and additional training for supervisors so they understand the need to enforce the policy consistently and effectively.

NLRB has signaled it will continue to take an active role in the law concerning social media. Accordingly, regularly consult with counsel to ensure your social media policies and disciplinary decisions with respect to employees' social media activities comply with the NLRA.

Important guidance

These recent developments reinforce NLRB's pro-union and pro-employee agenda. In light of this, continue to stay informed and regularly update and revise your employment policies and agreements. Taking such steps now may help you minimize liability for the new onslaught of NLRB-related litigation that is sure to come.

Jason C. Kim is a partner and Gray I. Mateo-Harris is an associate in the Labor and Employment practice group of Chicago-based law firm Neal, Gerber & Eisenberg LLP.

Did you know?

The National Roofing Legal Resource Center (NRLRC) provides members with free access to expert legal assistance to help address some of their toughest employment issues and problems. NRLRC members receive more than $2,000 worth of legal manuals, publications and newsletters in addition to discounted registration fees to NRLRC's Annual Seminar—Roofing Issues: Decks to Dockets and annual program held during the International Roofing Expo. To learn more, go to www.nrlrc.net.



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