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NLRB Upholds Standard Applied to Work Rules But Dissent Proposes New Framework

NLRB Upholds Standard Applied to Work Rules But Dissent Proposes New Framework

By: Rob Dare – 4/21/16

It seems that every week brings a new NLRB decision that declares workplace conduct rules unlawful (see the previous blog post). Last week was no different, when the majority of the Board held two rules in a Beaumont Hospital surgical services Code of Conduct to be unlawful. However, the decision is particularly noteworthy because a forceful dissent by a Member of the Board called for the abandonment of the decade-old standard used by both the Board and courts to evaluate workplace rules. The Luther Heritage standard (named for the case in which it was announced), provides that employment policies, work rules, and handbook provisions are unlawful if employees “would reasonably construe” the language to prohibit protected activities under Section 7 of the NLRA, which grants employees the right to engage in union organizing, collective bargaining, and other concerted activities for the purpose of mutual aid or protection.

The rules at issue prohibited:

  1. Employee conduct that, in the context of patient care and hospital operation, “impedes harmonious interactions and relationships.”
  2. “Negative or disparaging comments about the moral character or professional capabilities of an employee or physician made to employees, physicians, patients, or visitors.”

According to the majority, the first rule is unlawfully overbroad because it could “encompass any disagreement or conflict among employees, including those related to discussions and interactions protected by Section 7.” And the second rule is unlawful because it “would reasonably be construed to prohibit expressions of concerns over working conditions.”

Member Miscimarra, however, explained that in his view, the case (and result) illustrates the problematic nature of the Luther Heritage standard – that it places too much emphasis on the effect that facially neutral work rules have on Section 7 rights, while failing to consider any legitimate reasons employers have for implementing the rules in the first place. Listing the “multiple defects” of the standard, Miscimarra essentially argues that the “single-minded focus” of the “reasonably construe” standard “prevents the Board from giving meaningful consideration to the real world ‘complexities’ associated with many employment policies, work rules, and handbook provisions.” Here, he opines, the two rules helped serve the public interest by protecting patients and family members from needless conflict in hospital settings, but that is ignored under Lutheran Heritage.

The solution, according to Miscimarra, is to replace Luther Heritage with a balancing test where employees’ Section 7 interests are weighed against the employer’s particular business justification for the rule in question. Unpersuaded, the majority replied that a finding that “a particular rule threatens to have a chilling effect does not mean, however, that an employer may not address the subject matter of the rule and protect his legitimate business interests [with a] more narrowly tailored rule that does not infringe on Section 7 rights.”

Thus, Luther Heritage remains the standard that will be applied to employer rules. Accordingly, all employers, unionized or not, should continue to carefully craft and narrowly tailor the language within its handbook, code of conduct, etc. But, we will continue to monitor NLRB decisions and any relevant changes, as Member Miscimarra has provided a powerful road map for future work rule challenges.

NLRB Rules Against Quicken Loans

By Dan Cohen – 4/11/16

On April 7, 2016, Quicken Loans and several of Dan Gilbert’s other businesses were ordered to make 24 changes to their employee rules by Administrative Law Judge David Goldman because the rules were overly broad and violated Section 8(a)(1) of the National Labor Relations Act. Section 8(a)(1) prohibits employers from interfering with, restraining, or coercing employees in the exercise of the rights guaranteed in Section 7 of the Act.  According to Judge Goldman, the 24 work rules infringed upon employee rights to engage in concerted activities, including the right to discuss, debate, and communicate with each other regarding their workplace terms and conditions of employment.

Quicken argued that the employee manual (a/k/a “the Big Book”) had limited use, had only been distributed to some employees, was not used or relied upon by managers and that the manual played no active role in the employees’ work life. Quicken’s arguments were rejected because the evidence established that nothing amended or contradicted the offending rules and employees were not advised that they could engage in the conduct prohibited by the manual.  According to ALJ Goldman, “once offending rules are placed in an employer-developed employee rulebook and distributed to employees, it takes forceful and specific countervailing evidence of their disavowal to strip them of their tendency to coerce.”

Turning to the language of the manual, Judge Goldman found 24 rules and statements to violate the NLRA and ordered Quicken and the other companies to cease and desist from maintaining the following overly broad rules that:

  • Prohibit disclosure of unspecified “confidential information” in the employee handbook;
  • Prohibit employees from knowingly making false or misleading EEO complaints or EEO complaints in bad faith;
  • Require employees making complaints or participating in investigations to agree to maintain confidentiality;
  • Require employees to dress and conduct themselves in a professional manner;
  • Require employees to keep non-public financial or operational information confidential;
  • Require employees to resolve work-related concerns by speaking to team leaders and not taking it on-line;
  • Prohibit employees from displaying information that could be deemed harmful or offensive to the reasonable person;
  • Prohibit unauthorized postings and solicitations on company property;
  • Discourage emails that reflect unfavorably on the company and its reputation;
  • Prohibit non-business activities on company property;
  • Prohibit email use for activities other than company business;
  • Require employees to direct all press inquiries about the business and its directors to corporate communications persons;
  • Define confidential information as non-public information about the business, personnel, customers, operations and affairs;
  • Prohibit use of company resources which presents a threat of harm to the company or its reputation;
  • Prohibit conduct that is not in the best interests or the company, its clients or team members;
  • Prohibits signature lines with religious, political, sexual or other inappropriate content;
  • Prohibit employees from using personal web pages or sites that reference the company or which disclose information about the company without the permission of the marketing team;
  • Prohibit employees from sending non-business related attachments to emails or communicating with the media without express authorization from the corporate communications team;

Quicken has indicated it will appeal the ALJ’s decision to the full NLRB, and if necessary, to federal circuit court. Given the track record of the NLRB, I would not expect a reversal.  But, in order to move the case away from the Agency and into court, Quicken must exhaust its administrative remedies.  Thus, taking an appeal to the anti-employer NLRB must occur before Quicken is likely to get a fair shake.

While we applaud Mr. Gilbert and his efforts to fight what is clearly government overreach, we have been advising businesses now for several years on how to re-write many of the above rules in a way that protects important business rights and values without becoming fodder for the NLRB. Employers can still protect confidential information without prohibiting discussions about wages and benefits.  And, employers can still prohibit misconduct without labeling it as unprofessional, not in the company’s best interest or that which reflects unfavorably on the business.  Of course, some of the opinions are more troubling than others and hopefully Mr. Gilbert will have success once he can make his arguments in federal court. However, re-writing many of the work rules will save you defense costs, and disarm unions from using the unfair labor practice findings against your business in a union organizing drive or otherwise.  And, it will spare you the requirement of posting notices at your facilities for 60 days, which advise employees you violated federal law and reminds employees of their right to unionize.