NLRB General Counsel Issues Report on Employee Handbook Rules

March 18, 2015  |  No Comments  |  by admin  |  Company News

On March 18, 2015, the General Counsel of the National Labor Relations Board (NLRB) issued a report (Report), the purpose of which is to provide guidance to employers on which employee handbook rules, in the NLRB’s view, comply with the National Labor Relations Act (Act) and which employee handbook rules do not. Work rules could infringe on Section 7 activity and therefore violate the Act. Section 7 of the Act protects a host of activities, including employees’ right to engage in concerted activity, such as when employees act together to improve their pay and working conditions, with or without a union. Examples of concerted activity include two or more employees speaking to their employer about increasing their pay or discussing with each other work-related issues beyond pay, such as safety concerns.

The Report offers helpful insights on many topics that routinely appear in employee handbooks. The Report is an extremely useful tool in measuring the potential lawfulness or unlawfulness of various workplace rules. All employers, including those without unions, may wish to take heed of the Report and assess their employee handbooks in light of the Report.

Rules Regarding Confidentiality
The Report recognizes that employees have the right to discuss wages, hours, and other terms and conditions of employment with co-workers and non-employees, such as union representatives. It follows then that a policy specifically prohibiting employees from discussing the terms and conditions of employment, or a rule that employees would reasonably understand to prohibit such conversations, would, according to the NLRB, violate the Act. For example, the NLRB concluded that a rule prohibiting employees from sharing information that was not already public was facially unlawful because employees would reasonably understand it to encompass non-public information such as employee wages, benefits, and other terms and conditions of employment. Additionally, the Report explains, a confidentiality rule that broadly encompasses “employee” or “personnel” information, without further clarification, will reasonably be construed by employees to restrict Section 7 protected communications.

In contrast, the Report notes, broad prohibitions on disclosing “confidential” information are lawful so long as they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment. This is so, the Report explains, because employers have a substantial and legitimate interest in maintaining the privacy of certain business information. Thus, the NLRB found a rule that prohibited disclosure of confidential financial data, or other non-public proprietary information company information was facially valid. Not surprisingly, context is everything, as an otherwise unlawful confidentiality rule will be found lawful if, when viewed in context, employees would not reasonably understand the rule to prohibit Section 7 protected activity. As an example, the Report cites a rule that prohibits disclosure of all “information acquired in the course of one’s work.” If read in isolation, this rule could be understood to include wages and benefits as confidential information. Because this particular rule was situated among rules relating to conflicts of interest and compliance with securities regulations and federal and state laws, the NLRB concluded that employees would not reasonably understand the information described to encompass Section 7 protected activity.

Rules Regarding Employee Conduct Toward the Company and Supervisors
The Report recognizes that employees have the Section 7 right to criticize or protest their employment labor policies or the treatment of employees. Thus, rules that can reasonably be read to prohibit protected concerted criticism of the employer will be found unlawfully overbroad. By way of example, the Report provides that a rule prohibiting employees from engaging in “disrespectful,” “negative,” “inappropriate,” or “rude” conduct towards the employer or management will usually be unlawful absent sufficient clarification or context. Similarly, criticism will not lose the protection of the Act simply because that criticism is false or defamatory; rather, to be found lawful, the rule banning false statements must specify that only maliciously false statements are prohibited.

The Report also recognizes that a rule requiring employees to be respectful and professional to co-workers, clients, or competitors, but not the employer or management, are generally lawful because, according to the NLRB, employers have a legitimate interest in having employees act professionally and courteously with co-workers, customers, employer business partners, and other third parties. Thus, the NLRB has found lawful a rule that provides there will be no “rudeness or unprofessional behavior towards a customer, or anyone in contact with” the company. Similarly, a rule prohibiting conduct that amounts to insubordination would not, in the NLRB’s view, be construed as infringing on protected activities, nor would a rule that employees would reasonably understand to prohibit insubordinate conduct. In addition, a rule requiring employees to cooperate with each other and the employer in the performance of their work generally does not, according to the NLRB, implicate Section 7 rights. By way of example, the NLRB found the following rule to be lawful: “Each employee is expected to work in a cooperative manner with management/supervision, co-workers, customer and vendors.”

Although an employee’s right to criticize the employer’s labor policies and treatment of employees includes the right to do so in a public forum, the Report also acknowledges that the Act does not protect employee conduct aimed at disparaging an employer’s product.

Rules Regarding Employee Conduct Toward Co-Workers
The Report provides that employees have the right under the Act to argue and debate with each other about unions, management and their terms and conditions of employment. As a result, a rule that bans “negative” or “inappropriate” discussions among its employees, without further clarification, is generally found to be prohibiting protected discussions and interactions. In addition, a rule declaring that employees could not make “insulting, embarrassing, hurtful or abusive comments about other company employees online” and should “avoid the use of offensive derogatory, or prejudicial comments” was found by the NLRB to be unlawfully overbroad because employees would reasonably read such a rule to limit their ability to (i) honestly discuss topics protected by Section 7 and (ii) criticize supervisors and managers, since they too are “company employees.”

The Report acknowledges that employers can adopt anti-harassment rules, so long as they are not so broad that employees would reasonably read them as prohibiting vigorous debate or intemperate comments regarding Section 7 protected subjects. The NLRB has found lawful rules prohibiting “inappropriate gestures, including visual staring,” “harassment of employees, patients or facility visitors,” and logos or graphics worn by employees that “reflect any form of violent, discriminatory, abusive, offensive, demeaning, or otherwise unprofessional image.”

Rules Regarding Employee Interactions with Third Parties
The Report makes clear that handbook rules that reasonably would be read to restrict an employee’s right to communicate with the news media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment are considered unlawfully overbroad. Although a company may control who may make official statements on its behalf, the Report cautions companies to make sure that their rules may not be read to prohibit employees from speaking to the media or other third parties on their own or on others’ behalf.

Rules Restricting Use of Company Logos, Copyrights, and Trademarks
The Report provides that although a company’s name and logo are usually copyright protected, handbook rules cannot bar employees’ fair protected use of that property, such as the right to use the name and logo on picket signs, leaflets, and other protest material. Similarly, an employer’s proprietary interests are not implicated by an employee’s non-commercial use of a name, logo, or other trademark to identify the employer in the course of Section 7 activity. The lesson here, according to the Report: a broad ban without any clarification will generally be found unlawful.

Rules Restricting Photography and Recording
The Report recognizes that employees have a Section 7 right to photograph and make recordings in furtherance of their protected concerted activity, including the right to use personal devices for such pictures and recordings. As a result, rules imposing a total ban on such photography or recordings, or banning the use or possession of personal cameras or recording devices, are unlawfully overbroad where an employee would reasonably read them to prohibit the taking of pictures or recordings on non-work time.

Rules Restricting Employees from Leaving Work
According to the Report, employer rules that regulate when employees can leave work are unlawful if employees would reasonably read those rules to forbid protected strike actions and walkouts. Where the rules make no mention of “strikes,” “walkouts, or “disruptions,” the Report goes on to say that such rules will generally be found lawful because employees will reasonably understand them to pertain to leaving their posts for reasons unrelated to Section 7 protected concerted activity. Context, again, is everything, as rules which on their face seem unlawful because they contain an overbroad term (e.g., “walking off shift”) may be reasonable under the particular circumstances presented.

Rules Regarding Conflict of Interests
The Report acknowledges that employees have the right to engage in concerted activity to improve the conditions of employment, even where that activity is in conflict with the company’s interests. Therefore, if a conflict of interest rule would reasonably be read to ban activities, such as a protest in front of the employer, organizing a boycott, or soliciting support for a union while on nonwork time, then the rule will be found unlawful. Where, however, the rule provides examples or clarifies that it is limited to legitimate business interests, the Report recognizes that the rule will reasonably be understood to prohibit only unprotected activity. Preventing employees from engaging in competing business is an example of a legitimate business interest.

The Report provides a number of examples of rules that the NLRB has found to be unlawful, as well as rules it has found to be lawful. Equally important, the Report offers the NLRB’s explanation as to why the cited employer rule is or is not legally deficient.

Finally, the Report discusses handbook rules from a recently-settled unfair labor practice charge against Wendy’s International (Wendy’s). The Report identifies those Wendy’s rules the NLRB initially concluded were unlawful, along with an explanation why, as well as Wendy’s modified rules that were adopted pursuant to a settlement agreement. The Office of General Counsel considers those modified rules lawful. Among the topics covered by the settlement agreement with Wendy’s are provisions relating to handbook disclosure, social media, conflict of interest, confidential information, employee conduct, and use of cell phones and cameras.

The Report can be accessed at the General Counsel Memo page of the NLRB website: http://www.nlrb.gov/reports-guidance/general-counsel-memos.
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If you would like additional information, please contact David H. Ganz, Esq. at 201-399-7238 (dganz@bertonepiccini.com) or Marc W. Garbar, Esq. at 201-399-7234 (mgarbar@bertonepiccini.com)

Shortening the Statute of Limitations in Employment Cases: It Can Be Done

July 11, 2014  |  No Comments  |  by admin  |  Company News

In an article published in the January 30, 2012 edition of The New Jersey Law Journal, Bertone Piccini employment attorney David H. Ganz wrote about whether employers could shorten the statute of limitations in employment cases, and if so, how they could that.  On June 19, 2014, New Jersey’s Appellate Division weighed in on that very subject.  In Rodriguez v. Raymours Furniture Company, a for-publication decision, the appellate court held that a provision in an employment application, in which the employee waived the two-year statute of limitations applicable to claims against the employer and shortened the period for such claims to six months, was enforceable.

In Rodriguez, the plaintiff (Rodriguez) was presented with an employment application.  Before the signature line was a statement, in bold-faced large print, advising the applicant to read carefully before signing, as what followed became part of the official employment record and personnel file.  The final two paragraphs after that statement were completely capitalized.  The first contained an agreement that (i) any claim relating to the applicant’s service with the company must be filed no more than six months after the date of the challenged action and (ii) the applicant waives any statute of limitations to the contrary.  The second contained the applicant’s agreement to waive a jury trial.

Approximately nine months after Rodriguez’s employment was terminated during a reduction-in-force, he filed a lawsuit, claiming he was discharged in retaliation for having filed a workers’ compensation claim and was discriminated against based in disability, in violation of the New Jersey Law Against Discrimination (NJLAD).  The trial court granted the company’s motion for summary judgment, finding that Rodriguez’s complaint was time-barred.  He appealed, arguing that the shortened limitation period was unconscionable.

In its analysis, the Appellate Division considered principles of procedural and substantive unconscionability.  Regarding the former, the court found that while the employment application was non-negotiable and therefore, a contract of adhesion, that did not make it per se unenforceable.  In fact, the Appellate Division held for a number of reasons that the level of procedural unconscionability was “by no means overwhelming” and was “minimal.”  First, was the provision’s placement:  it was not buried in a large volume of documents but was conspicuously placed in a two-page application, set apart by bold, oversized print and capital lettering above the signature line.  Second, the terminology was “clear and uncomplicated.”  Third, Rodriguez was not pressured to complete and sign the application quickly; instead he was allowed to take the application home and complete it as his leisure.

Turning to its substantive unconscionability analysis, the Appellate Division considered four factors:  the subject matter of the contract; the parties’ relative bargaining positions; the degree of economic compulsion motivating the adhering party; and the public interests affected by the contract.  None, according to the court, weighed in favor of Rodriguez.  The Appellate Division held that a shortened limitations period was a valid and legitimate subject to be included in an employment contract and refused to find that a six month period was unreasonable, especially in light of the six-month statutory time frame to file an administration claim for a NJLAD violation. The appellate court also found that although the company was in a superior bargaining position, it did not hold a monopoly on the type of jobs for which Rodriguez applied.  It further found that Rodriguez was under no compulsion to proceed with the application if he was dissatisfied with any of the employment terms.

As to the third factor, the court remarked that while anyone in search of a job was under some level of economic compulsion, Rodriguez had presented no evidence that his circumstances were more egregious than any other applicant.  Finally, the Appellate Division determined that there was no adverse effect on public policy or public interests.  While New Jersey has a strong public policy reflected in various laws protecting workers’ rights, the court held that public policy was not harmed by a contractually agreed-upon, shortened limitations period, where that period was reasonable.  In the circumstances presented, the Appellate Division ruled that six months was reasonable.

This issue may not be over just yet.  The New Jersey Law Journal is reporting that Rodriguez’s attorney is preparing a petition for the case to be heard by the New Jersey Supreme Court.

The Appellate Division’s decision in Rodriguez may be found by clicking here.

“Marital Status” Discrimination under the NJLAD Includes Divorced Persons

July 11, 2014  |  No Comments  |  by admin  |  Company News

On June 27, 2014, New Jersey’s Appellate Division decided Smith v. Millville Rescue Squad, wherein the court examined the scope of the “marital status” protection under the NJLAD and in particular, whether it protects persons from discrimination because they are in the process of being divorced.  The court answered that question in the affirmative.

The Appellate Division observed that the New Jersey Legislature, unlike some other states, did not restrictively define “marital status” to include only married and unmarried persons.  In the absence of such a narrow definition, the appellate court rejected a lower court’s interpretation that “marital status” included only those who were married and unmarried.  Rather, the court liberally read the NJLAD in light of its remedial purpose, and interpreted the phrase to encompass the state of being divorced. Given “modern trends” involving divorce, the Appellate Division held that “it would significantly undermine the marital status protection, if an employer could freely discriminate against persons who choose to divorce.”  The appellate court further found that “[m]arital status necessarily embraces stages preliminary to marriage – one’s engagement to be married,” as well as “stages preliminary to marital dissolution – separation and involvement in divorce proceedings.”

The Appellate Division’s decision in Smith may be found by clicking here.

Legislative Update I: Opportunity to Compete Act Approved by New Jersey Legislature

July 11, 2014  |  No Comments  |  by admin  |  Company News

The Opportunity to Compete Act (Act), on which we reported in the March and December 2013 Client Alerts, is one step away from becoming law.  On June 26, 2014, both houses of the New Jersey Legislature passed the measure, which generally prohibits an employer from asking about a job applicant’s criminal record until after the first interview. The bill applies to companies with 15 or more employees, though there are some exceptions, including where the position sought is in law enforcement or where a criminal history record background check is required by law, rule, or regulation.

If the Act becomes law, employers who violate it shall be liable for a civil penalty in an amount not to exceed $1,000 for the first violation, $5,000 for the second violation, and $10,000 for each subsequent violation.  The Act specifically provides that nothing therein shall be construed as creating, establishing, or authorizing a private cause of action by an aggrieved individual against an employer who has violated, or is alleged to have violated, the Act.

Legislative Update II: Bill to Protect Interns Advances in New Jersey Senate

July 11, 2014  |  No Comments  |  by admin  |  Company News

On June 23, 2014, the New Jersey Senate passed S-539, known as the New Jersey Intern Protection Act.  The bill would amend the NJLAD, the New Jersey Conscientious Employee Protection Act, and the New Jersey Freedom from Employer Intimidation Act to afford interns, whether paid or unpaid, the same protections from unlawful conduct as those given to employees.  S-539 has been referred to the New Jersey Assembly Labor Committee.