National Labor Relations Board

NLRB Holds That Discharge of Employees for Facebook Conversation Was Unlawful

September 10, 2014

By Robert F. Manfredo
On August 22, 2014, the National Labor Relations Board ("NLRB") issued companion decisions in Three D, LLC d/b/a Triple Play Sports Bar and Grille, holding that the employer violated the National Labor Relations Act ("NLRA") by terminating two employees for participating in an online discussion on Facebook.  The Triple Play decision is yet another reminder to employers to exercise caution in imposing discipline against employees for conduct that takes place on social media.  The decision also underscores the need for employers to review their existing social media policies to ensure that the policies are not so overly broad that employees might interpret them to prohibit complaints and conversations about their terms and conditions of employment. Triple Play is a bar and restaurant whose employees are not unionized.  In January 2011, Jillian Sanzone and another employee discovered that they owed more in State income taxes than they had expected due to a withholding error by Triple Play.  While at work, Sanzone complained about this issue to other employees who, in turn, complained to the employer.  In response, the employer planned to hold a meeting in February with its staff members and payroll company to discuss the employees' concerns. On January 31, 2011, Jamie LaFrance, who had left her employment with Triple Play in November 2010, posted the following “status update” to her Facebook page:  "Maybe someone should do the owners of Triple Play a favor and buy it from them.  They can’t even do the tax paperwork correctly!!!  Now I OWE money . . . Wtf!!!!"  Several employees and non-employees responded to LaFrance’s post with various comments, most of which used profanity and criticized Triple Play's owners.  One employee, Vincent Spinella, did not post a comment, but did select the “Like” button under LaFrance’s original comment.  Sanzone posted her own comment, stating:  “I owe too.  Such an asshole.” One of Triple Play's owners learned about the Facebook discussion through his sister, who was a Facebook “friend” of LaFrance.  When Sanzone reported to work on February 2, 2011, Triple Play's owners notified her that she was being discharged because of her Facebook comment.  On February 3, 2011, when Spinella reported to work, Triple Play’s owners called him into a meeting, questioned him about the Facebook conversation, and informed him that he was being discharged because his selection of the "Like" button meant that he supported the "disparaging and defamatory comments" of the other participants in the conversation. The NLRB affirmed the Administrative Law Judge’s decision that the Facebook discussion constituted concerted activity under Section 7 of the NLRA and “was ‘part of an ongoing sequence’ of discussions that began in the workplace about the Respondent’s calculation of employees' tax withholding.”  The NLRB also held that Sanzone and Spinella were engaged in protected concerted activity because the Facebook discussion related to “workplace complaints about tax liabilities, the Respondent’s tax withholding calculations, and LaFrance’s assertion that she owed back wages.”  Notably, the NLRB found that Spinella’s selection of the “Like” button “expressed his support for others who were sharing their concerns and ‘constituted participation in the discussion that was sufficiently meaningful as to rise to the level of’ protected, concerted activity.” In balancing the interest of Triple Play's owners in preventing disparaging comments by their employees, the NLRB held that Spinella's and Sanzone’s comments were not “so disloyal” as to lose protection under the NLRA.  Accordingly, the NLRB affirmed the Administrative Law Judge’s decision that Triple Play violated the NLRA by interrogating and discharging Spinella and Sanzone because of their participation in the Facebook conversation. Notably, the NLRB also found that Triple Play's “Internet/Blogging” policy violated Section 8(a)(1) of the NLRA.  Although the policy did not explicitly restrict protected activity, the NLRB held that the policy, insofar as it prohibited employees from engaging in “inappropriate discussions about the company,” was overly broad.  In light of Triple Play's discharge of Spinella and Sanzone, the NLRB reasoned that Triple Play's other employees could reasonably interpret the policy as prohibiting discussions regarding their terms and conditions of employment.

Update: The NLRB and Employment-At-Will Policies in 2014

July 21, 2014

By Daniel P. Forsyth
We originally addressed this topic on November 9, 2012, discussing the National Labor Relations Board's scrutiny of employer handbooks containing employment-at-will provisions.  Since these disclaimers are widely used in handbooks – as well as employment applications and offer letters – the NLRB’s sudden focus on such provisions was potentially significant.  Employers drew some comfort from two 2012 Advice Memoranda issued by the NLRB’s General Counsel’s Office (Case 32-CA-086799 & Case 28-CA-084365), but both of those Advice Memoranda warned employers that “the law in this area remains unsettled.” Fast forward to July 2014.  Is there anything new on this topic and if so, should employers be concerned?  In fact, there have been two noteworthy developments this year. First, on February 25, 2014, the General Counsel’s Office issued a memorandum on “Mandatory Submissions to Advice” which noted there should be “centralized consideration of certain issues” by the General Counsel's Office.  The memo went on to cite “cases involving ‘at-will’ provisions in employer handbooks” as an area identified for such centralized oversight.  Accordingly, the NLRB’s 26 regional offices will submit cases involving at-will provisions to the General Counsel’s Office for guidance, to the extent that prior NLRB case law precedent or earlier Advice Memoranda do not definitively resolve the legal issues being faced.  In sum, look for continuing developments coming straight from Washington, D.C., on this subject. Second, the General Counsel’s Office recently found the following at-will policy of Lionbridge Technologies in Redmond, Washington, did not obstruct employees from organizing a union or interfere with other concerted activity under Section 7 of the National Labor Relations Act:
Employment at [the Employer] is on an at-will basis unless otherwise stated in a written individual employment agreement signed by the [Senior Vice President of] Human Resources.  This means that employment may be terminated by the employee or [the Employer] at any time, for any reason or for no reason, and with or without prior notice. No one has the authority to make any express or implied representations in connection with, or in any way limit, an employee’s right to resign or [the Employer’s] right to terminate an employee at any time, for any reason or for no reason, with or without prior notice.  Nothing in this handbook creates an employment agreement, express or implied, or any other agreement between any employee and [the Employer]. No statement, act, series of events or pattern of conduct can change this at-will relationship.
(Brackets in original). In finding the above provision to be lawful, the GC’s Office reasoned:
  • the language, on its face, did not expressly limit any union organizing or concerted activity;
  • the employer did not promulgate the disclaimer in response to union organizing or concerted activity;
  • the employer had not applied the policy unlawfully;
  • employees could not reasonably construe the provision to prohibit union organizing or concerted actions;
  • the language did not threaten discipline for employees seeking to unionize to change their at-will status; and
  • the policy did not ask employees to waive any rights they held under Section 7.
In concluding the policy was lawful, the General Counsel’s Office essentially aligned with what employers have long intended regarding their at-will disclaimers:  such provisions have everything to do with providing a rock-solid defense to claims by ex-employees for breach of an implied employment contract and nothing whatsoever to do with inhibiting union organizing or other concerted activity.  While the latest news from Washington, D.C., is clearly favorable and pro-employer, employers should nevertheless carefully review any at-will policy to ensure it is lawful, in light of the NLRB’s continued interest in scrutinizing such provisions.

U.S. Supreme Court Declares President Obama's NLRB Recess Appointments Unconstitutional

June 26, 2014

By Subhash Viswanathan

On June 26, 2014, the U.S. Supreme Court affirmed the decision issued by the U.S. Court of Appeals for the District of Columbia Circuit that President Obama's recess appointments to the National Labor Relations Board ("NLRB") on January 4, 2012, were unconstitutional.  The Supreme Court's decision in NLRB v. Noel Canning means that the NLRB did not have a valid quorum of three members from the date of the recess appointments to early August of 2013, when four new members were sworn in after being confirmed by the Senate.  Every decision issued by the NLRB during that approximately 19-month time period without a valid quorum has been rendered invalid by the Supreme Court's Noel Canning decision.  It remains to be seen how the NLRB will deal with this development, but it may now have to reconsider and issue new decisions in each and every case that was decided without a valid quorum in place.  However, in light of the fact that the majority of the NLRB members is still staunchly pro-union, it would be unrealistic to expect significantly different outcomes in cases that were decided against employers. Although the Supreme Court affirmed the D.C. Circuit's conclusion that President Obama exceeded his authority under the Recess Appointments Clause of the U.S. Constitution, the Supreme Court disagreed with the D.C. Circuit's narrow interpretation of the Recess Appointments Clause.  The Recess Appointments Clause permits the President to "fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."  The D.C. Circuit held that the phrase "the Recess of the Senate" applies only to recesses that occur in between sessions of the Senate -- not to breaks in activity that occur during a session of the Senate.  The January 4, 2012, recess appointments were not made during a recess that occurred in between sessions of the Senate.  The D.C. Circuit also interpreted the phrase "Vacancies that may happen during the Recess of the Senate" to mean that the vacancy actually must arise during the Senate's inter-session recess in order for the President to have the authority to fill the vacancy without going through the Senate confirmation process.  None of the three vacancies that President Obama sought to fill on January 4, 2012 arose during the Senate's inter-session recess. The Supreme Court adopted a broader interpretation of the scope of the President's authority under the Recess Appointments Clause.  The Supreme Court held that the phrase "the Recess of the Senate" applies both to inter-session recesses (breaks that occur between sessions of the Senate) and intra-session recesses (breaks that occur in the midst of a formal session of the Senate) of substantial length.  The Supreme Court also held that the phrase "Vacancies that may happen during the Recess of the Senate" applies both to vacancies that first arise during a recess and vacancies that initially occur before a recess but continue to exist during the recess.  The Supreme Court nevertheless determined that President Obama's recess appointments during a three-day intra-session recess of the Senate were unconstitutional because the three-day recess was not of substantial length.  The Supreme Court held that a recess of less than ten days is presumptively too short to permit the President to make recess appointments, but left open the possibility that unusual circumstances might require the President to exercise recess appointment authority during a recess of less than ten days. Some of the NLRB decisions that have now been rendered invalid include:  (1) the NLRB's September of 2012 holding in Costco Wholesale Corp. that an employer's social media policy was overly broad and in violation of Section 8(a)(1) of the National Labor Relations Act ("NLRA"); (2) the NLRB's December of 2012 holding (and reversal of 50 years of precedent) in WKYC-TV, Inc. that an employer's obligation to check off union dues continues after the expiration of a collective bargaining agreement; (3) the NLRB's December of 2012 holding (and reversal of 35 years of precedent) in American Baptist Homes of the West d/b/a Piedmont Gardens that witness statements related to employee discipline are not necessarily shielded from disclosure to the union; and (4) the NLRB's July of 2012 holding in Banner Health System that an employer violated Section 8(a)(1) of the NLRA by asking employees not to discuss ongoing investigations with their co-workers. Although these decisions and many others will likely be revisited, it seems unlikely that the NLRB will issue significantly different rulings.  Accordingly, employers should assume at this point that the invalid decisions will be affirmed by the current NLRB.

NLRB ALJ Rules That An Interim Grievance Procedure Does Not Require An Arbitration Option

June 17, 2014

By Sanjeeve K. DeSoyza
In a decision issued last week, an Administrative Law Judge (“ALJ”) for the National Labor Relations Board (“NLRB”) ruled that an interim grievance procedure between an employer and a newly-certified union did not have to include an arbitration option in order to relieve the employer of the obligation to provide the union with notice and an opportunity to bargain before imposing significant discretionary discipline. As we previously posted, in late 2012, the NLRB issued a groundbreaking decision in Alan Ritchey, Inc., requiring for the first time that in the absence of a binding agreement addressing discipline, an employer must provide the union with a bargaining opportunity prior to issuance of significant discretionary discipline (i.e., suspension, demotion, or discharge).  This issue would ordinarily arise during the period after a union is newly certified, but before an agreement has been reached with the employer on an initial contract. The Alan Ritchey decision did not specifically address whether an interim grievance procedure had to offer an arbitration option if internal grievance efforts failed to resolve any disagreement over the proposed discipline.  There was no binding agreement between the employer and the union in the Alan Ritchey case and, recognizing the significant change in the law that the decision entailed, the NLRB decided to apply the new requirement on a prospective basis only. In Medic Ambulance Service, ALJ Cracraft found that an interim grievance procedure did not require an arbitration option to satisfy the Alan Ritchey requirements.  In Medic Ambulance, while negotiations for an initial collective bargaining agreement were underway, the employer and the newly certified union agreed to follow the first two steps set forth in the grievance/arbitration section of the employer’s expired agreement with a prior union.  The parties also expressly agreed, however, that the third step (arbitration) would not be available until a new contract was signed. ALJ Cracraft found that the agreement regarding the first two grievance steps constituted an agreed-upon interim grievance procedure that relieved the employer of its obligation to bargain with the union prior to imposing significant discretionary discipline.  The General Counsel for the NLRB contended that the procedure did not satisfy the Alan Ritchey requirements because it did not include an arbitration option, but ALJ Cracraft summarily rejected that argument:
Surely if the Board intended to mandate arbitration as a part of an interim grievance procedure, its decision would have clearly provided such guidance.  Thus, in disagreement with the General Counsel, I find that Alan Ritchey does not specifically require that an interim grievance procedure contain an arbitration component.
Having concluded that arbitration was not a required element of an interim grievance procedure, the ALJ held that the two-step “grievance only” procedure was sufficient to relieve the employer of its obligation to provide the union with notice and an opportunity to bargain before it terminated several employees. The ALJ's Medic Ambulance decision offers a welcome constraint to the far-reaching scope of the NLRB's Alan Ritchey decision.  Employers should be cautioned, however, that the ALJ's decision is not binding precedent and the union may still pursue an appeal to the NLRB.

NLRB Asserts Jurisdiction Over a Charter School in New York

June 16, 2014

For the first time in New York State, a Regional Director for the National Labor Relations Board ("NLRB") has asserted NLRB jurisdiction over a New York charter school, and ordered an election for a unit of approximately 35 teachers at the school.  The decision, Hyde Leadership Charter School Brooklyn, Case No. 29-RM-126444, preempts the New York Public Employment Relations Board ("PERB") from asserting jurisdiction, and conflicts with prior PERB decisions holding that charter schools are public entities for labor relations purposes. The Hyde Leadership decision involved a representation petition for teachers at a charter school in Brooklyn, New York.  On April 14, 2014, the United Federation of Teachers, Local 2 (the "Union"), filed a petition with PERB seeking certification for a unit of approximately 35 teachers at the school.  That same day, the school filed a representation petition with the NLRB seeking an election for the same unit of employees.  Because the National Labor Relations Act excludes “any state or political subdivision thereof,” the NLRB was tasked with deciding the public or private nature of the charter school. To establish jurisdiction over the Hyde Leadership school, the NLRB would have to determine that the school was not a “political subdivision” of the state under the Supreme Court’s standard set forth in its NLRB v. Natural Gas Utility District of Hawkins County decision.  Under the Hawkins County decision, an entity is a political subdivision if it is created directly by state so as to constitute a department or administrative arm of the government, or if it is administered by individuals who are responsible to public officials or to the general electorate. Applying the Hawkins County standard to the Hyde Leadership school, the NLRB acknowledged the blend of public and private characteristics embedded in New York charter schools and the New York State Charter Schools Act (“Charter Schools Act”).  Factors suggesting a public character include:  the Board of Regents, a public entity, issues the charter and can revoke the charter upon discovering certain problems such as fiscal mismanagement; the school is funded almost entirely with public funds; the language of the Charter Schools Act refers to charter schools as independent and autonomous public schools and states that charter school employees are public employees for purposes of New York’s public employment relations law; the charter schools are subject to certain public officers laws; and New York City charter schools are subject to audit by the city comptroller. However, factors suggesting a private character include:  private individuals create and submit the charter agreement for approval (although this can optionally be done in conjunction with a public entity); except for laws specified in the Charter Schools Act, the charter schools are exempt from “all other laws and regulations governing public or private schools”; the charter schools are non-public for designation of textbooks, health services, student transportation, and other services; charter school employees are employees of the “education corporation” that runs the charter school, not the public school district; and there is no requirement that the board of directors for the charter schools be appointed or elected by any public entity or include any public officials. The Regional Director weighed the factors and concluded that the Hyde Leadership school was not a political subdivision under the Hawkins County test and therefore was subject to NLRB jurisdiction.  Specifically, the Regional Director held that the charter school was not “created by the state” because private individuals applied to establish the charter school, and it was not an “administrative arm of the government” because the governance and control of the charter school “vested solely in the private incorporators” rather than in the public entities.  Moreover, the school was not administered by individuals who are responsible to public officials or the general electorate, as none of the school’s governing trustees are appointed by public officials. Accordingly, the Regional Director asserted NLRB jurisdiction over the school and directed an election.  Although this does not establish a “bright line” rule that all New York charter schools will necessarily be subject to NLRB jurisdiction (and the Union may still challenge the Regional Director's decision), the factors that contributed to the holding are largely statutory, and may compel a similar conclusion for other charter schools in New York.

NLRB Regional Director Finds College Football Players Qualify as Employees and Can Unionize

March 26, 2014

By Katherine R. Schafer
In a stunning and potential landmark decision, a Regional Director of the National Labor Relations Board has found that football players receiving grant-in-aid scholarships from Northwestern University (the “University”) are “employees” under the National Labor Relations Act.  In his decision released Wednesday afternoon, the Regional Director determined that “players receiving scholarships to perform football-related services for [the University] under a contract for hire in return for compensation are subject to [the University]’s control and are therefore employees within the meaning of the Act.”  Accordingly, the Regional Director ordered that an election be conducted among all football players receiving grant-in-aid scholarships who have not exhausted their playing eligibility for the University. In support of his decision, the Regional Director found that the players receive compensation for the athletic services they perform in the form of scholarships, which pay for the players’ tuition, fees, room, board, and books and can total as much as $76,000 per calendar year for up to five years.  Furthermore, the Regional Director found that the players are under the strict control of the University throughout the year.  The coaches determine the location, duration, and manner in which the players carry out their football-related activities; they monitor the players’ adherence to NCAA and team rules; and they control “nearly every aspect of the players’ private lives,” including their living arrangements, applications for outside employment, off-campus travel, social media posts, and communications with the media.  In contrast, the Regional Director held that “walk-ons do not meet the definition of ‘employee’ for the fundamental reason that they do not receive compensation for the athletic services that they perform.” The University has confirmed that it plans to appeal the decision to the full National Labor Relations Board in Washington, D.C.  If upheld, the decision has the potential to dramatically alter the world of big-time athletics in higher education as it would open the door for scholarship athletes at all private universities to unionize.  Indeed, the decision could have implications for scholarship students in a number of areas beyond athletics. The Union, College Athletes Players Association (“CAPA”), which has the financial backing of the United Steelworkers, is seeking, among other demands, financial coverage for former players with sports-related medical expenses and the creation of an educational trust fund to help former players graduate.

National Labor Relations Board Reissues Proposed Rule on "Quickie" Elections

February 5, 2014

By Tyler T. Hendry

The National Labor Relations Board ("Board") reissued a proposed rule today that would significantly shorten the timetable for union representation elections.  This same proposed rule (which has become known as the "quickie" or "ambush" election rule) was initially issued by the Board on June 22, 2011.  After the proposed rule was met with strong opposition from employer organizations, the Board issued a final rule on December 22, 2011, that was a scaled-down version of the proposed rule.  The final rule became effective on April 30, 2012.  However, on May 14, 2012, the U.S. District Court for the District of Columbia declared the final rule to be invalid because the Board lacked a quorum when it voted on the final rule.  The Board appealed the decision, but recently announced that it was withdrawing its appeal. As some had predicted, the Board's withdrawal of its appeal set the stage for its reissuance of the broader June 22, 2011, proposed rule.  The proposed rule:

  • Establishes electronic filing of election petitions and other documents (intended to speed up processing);
  • Requires pre-election hearings to begin seven days after a petition is filed (currently, pre-election hearings can begin up to two weeks after a petition is filed);
  • Defers litigation of all “eligibility” issues if they involve less than 20% of the proposed bargaining unit until after the election (these issues would be decided post-election if needed);
  • Eliminates pre-election appeals of rulings by Board Regional Directors; and
  • Reduces the time in which an employer must provide an electronic list of eligible voters from seven days to two days.

If this proposed rule is implemented, it will significantly shorten the time period from the filing of a union representation petition to the date on which a representation election is held.  This creates a distinct advantage for the union, because it gives the employer less opportunity to counteract a union campaign which likely began well before the filing of the representation petition. Comments on the proposed rule from interested parties must be received on or before April 7, 2014.  After the comment period, the Board may revise the proposed rule, or may issue it as a final rule.  The Board’s decision to reissue the original proposed rule that was issued on June 22, 2011 (rather than the final rule that was issued on December 22, 2011) seems to indicate that the Board may not be willing to make significant changes before a final rule is issued.  However, it is likely that the final rule -- in whatever form it is issued -- will once again be challenged by employer organizations in federal court on the ground that the Board exceeded its rulemaking authority.

Union's Rejection of Company's "Final" Proposal Does Not Always Signify Impasse

January 5, 2014

By David E. Prager

In collective bargaining, a “final” proposal is often a term of art, used to signal the end of a party’s willingness to move.  However, negotiators frequently will continue to move even after a purportedly final offer.  In the view of the National Labor Relations Board ("NLRB"), “final” does not always really mean final.  Recently, the Fifth Circuit Court of Appeals agreed with the NLRB's view.  In Carey Salt Co. v. NLRB, the Fifth Circuit Court of Appeals affirmed the NLRB's holding that labor negotiations had not reached impasse, even though the union had asked for the company’s “final” proposal, the company had provided it, the union had rejected it, and the parties had thereafter confirmed that they were far apart. These facts, on their face, would seem to suggest that the parties had reached impasse, and that the company was therefore entitled at that point to suspend negotiations and implement its final offer.  However, the NLRB looked behind these facts, and concluded that the union, when it requested the company’s final offer, had not intended to bring negotiations to a halt.  The NLRB credited the union’s testimony that the union had wished only to poll its membership on the company’s position and continue bargaining.  The union’s negotiator testified – without significant rebuttal – that his request for a “final” offer had included the caveat that the parties negotiate further after receiving it.  Under these circumstances, the NLRB held, and the Fifth Circuit affirmed, that the company had prematurely seized on the final offer phraseology to declare impasse and to decline to meaningfully negotiate thereafter. This strategy had disastrous consequences for the company, not the least of which was that it was ultimately responsible for wages lost during an ensuing strike, which – as a result of the company’s premature cessation of negotiations and implementation of its final offer – was held to constitute an “unfair labor practice strike.”  Although the Fifth Circuit does not have jurisdiction over employers in New York, the Court's decision illustrates the treacherous waters that employers in any state must navigate when assessing whether impasse – always an evasive concept – has truly been reached.  The Fifth Circuit's decision includes a particularly scholarly recitation on the subject of impasse in collective bargaining, recounting and discussing precedent on this difficult issue. A second issue addressed in the case is whether, and under what circumstances, purportedly “regressive” proposals – i.e., company proposals that reduce previous terms or concessions – can be a factor in assessing “bad faith” bargaining on the part of the company.  The NLRB held that the company had bargained in bad faith by introducing so-called regressive proposals.  However, the Fifth Circuit rejected the NLRB's position, clarifying that regressive proposals are lawful as long as they are not designed or intended to avoid or frustrate bargaining.  The Fifth Circuit found no evidence that the regressive proposals had been deployed in a bad faith manner in this instance.  Therefore, the Court rejected the NLRB’s sweeping conclusion of bad faith based on these proposals alone.

Fifth Circuit Court of Appeals Invalidates NLRB's Ruling That Class Action Waivers Violate the NLRA

January 1, 2014

By Subhash Viswanathan

In D.R. Horton, Inc., the National Labor Relations Board ("NLRB") held that a mandatory arbitration agreement between an employer and an employee that included a class action waiver was unlawful under Section 8(a)(1) of the National Labor Relations Act ("NLRA") because it prohibited the employee from engaging in concerted activity with other employees.  The NLRB's D.R. Horton ruling, which was the subject of a prior blog post, dealt a significant blow to employers who sought to manage their litigation risk by requiring employees to sign mandatory arbitration agreements and class action waivers as a condition of employment.  The Second Circuit Court of Appeals, in a separate case decided on August 9, 2013, expressly declined to follow the NLRB's D.R. Horton ruling and held that a class action waiver in an arbitration agreement was enforceable under the Fair Labor Standards Act ("FLSA").  Recently, the Fifth Circuit Court of Appeals rejected the NLRB's D.R. Horton ruling, holding that class action waivers contained in mandatory arbitration agreements do not violate the NLRA and are enforceable under the Federal Arbitration Act ("FAA"). The Fifth Circuit began its analysis by noting that the FAA requires arbitration agreements to be enforced according to their terms, with two exceptions:  (1) an arbitration agreement may be invalidated "upon such grounds as exist at law or in equity for the revocation of any contract" (commonly referred to as the FAA's "saving clause"); and (2) application of the FAA may be precluded by another statute's contrary congressional command.  The Court concluded that neither of these exceptions applied to preclude the enforceability of the class action waiver contained in the mandatory arbitration agreement. The Court stated that the saving clause "is not a basis for invalidating the waiver of class procedures in the arbitration agreement."  The Court then examined whether the NLRA contained a congressional command to override the provisions of the FAA, and found that it did not.  The Court found that the "NLRA does not explicitly provide for such a collective action, much less the procedures such an action would employ," and concluded that "there is no basis on which to find that the text of the NLRA supports a congressional command to override the FAA."  The Court also looked to the legislative history of the NLRA for evidence of a congressional command to override the FAA, and found no such evidence.  Finally, the Court determined that no congressional command to override the FAA could be inferred from the underlying purpose of the NLRA.  Accordingly, the Court held that the class action waiver in the mandatory arbitration agreement was valid and enforceable under the FAA. The Fifth Circuit recognized that every other Circuit Court of Appeals that considered the issue (including the Second Circuit, as noted above) either suggested or expressly stated that they would not defer to the NLRB's rationale, and held class action waivers in arbitration agreements to be enforceable.  The Court stated that it did not want to create a split among the Circuit Courts by enforcing the NLRB's D.R. Horton decision. Although the Court refused to enforce the NLRB's ruling that the class action waiver violated the NLRA, the Court agreed with the NLRB that the mandatory arbitration agreement violated the NLRA to the extent that it would lead an employee to believe that the filing of unfair labor practice charges was prohibited.  The employer argued that this was not the intent of the mandatory arbitration agreement, and that employees remained free to file unfair labor practice charges with the NLRB.  However, the Court nevertheless enforced the portion of the NLRB's order requiring the employer to clarify the language of the mandatory arbitration agreement to permit the filing of unfair labor practice charges. It remains to be seen whether the NLRB will ask the U.S. Supreme Court to review the Fifth Circuit's decision.  In the meantime, employers should consider whether arbitration agreements with employees containing class action waivers might be a useful tool to limit the risk and cost associated with employment-related litigation.

The NLRB Invalidates Employer's Confidentiality Rule Prohibiting the Disclosure of Personal Employee Information

September 23, 2013

By Hilary L. Moreira

Recently, in Quicken Loans, Inc., the National Labor Relations Board ("NLRB") continued its close scrutiny of employers' confidentiality rules by affirming an administrative law judge's decision invalidating a rule prohibiting non-union employees from disclosing personal information about themselves or their co-workers, such as home phone numbers, cell phone numbers, addresses, and email addresses. Quicken's "Proprietary/Confidential Information" rule that was included in certain employment agreements prohibited employees from disclosing non-public information relating to the company's personnel, including "all personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses, and email addresses" to any person, business, or entity. In affirming the administrative law judge's decision, the NLRB held that "there can be no doubt that these restrictions would substantially hinder employees in the exercise of their Section 7 rights."  Quicken defended the rule as necessary to protect the time and expense invested in its employees, and to protect the confidential and proprietary information entrusted to the company.  The NLRB rejected this defense, and agreed with the administrative law judge that complying with Quicken's rule would prohibit employees from discussing with union representatives or their co-workers their own wages and benefits, or the names, wages, benefits, addresses, or telephone numbers of other employees.  The NLRB concluded that "this would substantially curtail their Section 7 protected concerted activities." The NLRB also affirmed the administrative law judge's invalidation of Quicken's Non-Disparagement provision in its entirety.  The provision stated that employees would not "publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees, with or through any written or oral statement or image . . . ."  The NLRB concluded that an employee would reasonably construe this provision as restricting his or her rights to engage in protected concerted activities. In the wake of this decision, and considering the fact that the NLRB is now comprised of a Senate-approved Democratic majority led by Chairman Mark Gaston Pearce, employers should expect continued close scrutiny of confidentiality policies.  Employers should carefully review their confidentiality rules to ensure that they do not prohibit employees from discussing wages, benefits, or other terms and conditions of employment either with their co-workers or with union representatives.  Employers should also consider including specific examples of prohibited disclosures and a clause specifically providing that the rule is not intended to prohibit an employee's exercise of rights protected by Section 7 of the National Labor Relations Act.

Fourth Circuit Court of Appeals Holds That Recess Appointments to the NLRB Were Unconstitutional

July 18, 2013

By Subhash Viswanathan

On July 17, 2013, the Fourth Circuit Court of Appeals held, in a 2-1 decision, that President Obama's January 4, 2012 recess appointments to the National Labor Relations Board ("NLRB") were unconstitutional because the Senate was not in "recess" at the time of the appointments.  The Fourth Circuit is the third federal appellate court to weigh in on this issue, joining the D.C. Circuit (which also held that the January 4, 2012 recess appointments were unconstitutional) and the Third Circuit (which held that Craig Becker's March 27, 2010 recess appointment was unconstitutional).

In the two consolidated cases before the Fourth Circuit, the majority followed the logic of the D.C. Circuit and the Third Circuit, and determined that the President is only authorized to make recess appointments without confirmation by the Senate during recesses that occur between sessions of the Senate rather than breaks in activity that occur while the Senate is in session.  This issue will ultimately be decided by the Supreme Court, which has agreed to consider the NLRB's appeal from the D.C. Circuit's Noel Canning decision.

NLRB Advice Memorandum Provides Further Guidance on Confidentiality In Investigations

June 27, 2013

By David M. Ferrara

A recent Advice Memorandum from the National Labor Relations Board's Division of Advice provides employers further guidance on how to address and structure employee confidentiality requirements during investigations.  As we reported before on this blog, in Banner Health System, the Board held that an employer violated Section 8(a)(1) of the National Labor Relations Act by directing employees not to discuss complaints made to the employer with co-workers while an investigation into the matter is pending.  In doing so, the Board put employers on notice that “blanket” confidentiality requirements would violate the right of employees to engage in protected concerted activity.

In the recent Advice Memorandum, the Division of Advice addressed the application of Banner Heath in reviewing Verso Paper’s confidentiality rule.  This case raised the question whether Verso’s confidentiality requirement “unlawfully interfered with employees’ Section 7 rights by precluding employees from disclosing information about ongoing investigations into employee misconduct.”  Verso’s Code of Conduct provided:

Verso has a compelling interest in protecting the integrity of its investigations.  In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up.  To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence.  If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Citing the Board’s decision in Banner Health, the Division of Advice agreed with the Regional Director that the rule was unlawfully overbroad, and advised that a complaint should be issued, absent settlement, against Verso for violating Section (8)(a)(1) of the NLRA.  The Region reasoned that Verso’s provision was in fact a “blanket rule” regarding confidentiality of employee investigations.  Instead, Verso’s rule needed to demonstrate a case-by-case need for confidentiality.  The Division of Advice stressed that the employer has the burden to show in each particular situation that it has a legitimate and substantial business justification for confidentiality, which will outweigh the interference with employees' Section 7 rights.  The Division of Advice also reiterated that a general concern with the investigation’s integrity is not enough, and cited the following factors mentioned in Banner Health where an employer may require confidentiality:  (1) there are witnesses in need of protection; (2) evidence is in danger of being destroyed; (3) testimony is in danger of being fabricated; or (4) there is a need to prevent a cover-up.

One could argue that the Verso Advice Memorandum did not plow any new ground beyond the Board's decision in Banner Health.  The Advice Memorandum reaffirms the principle set forth in Banner Health that a simple “blanket rule” of confidentiality during an investigation into employee misconduct will be found to be unlawful.  Rather, the employer must engage in an individualized assessment considering the need for confidentiality in each particular case, analyzing the factors mentioned in Banner Health.

Given the Board’s current position, employers are well advised to draft confidentiality rules consistent with Banner Health’s “specificity” requirements.  In this respect, the Verso Advice Memorandum provides some helpful guidance.  First, the Division of Advice noted that the first two sentences of Verso’s rule lawfully set forth the interest in protecting the integrity of Verso’s investigations, which were:

Verso has a compelling interest in protecting the integrity of its investigations.  In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up.

Second, the Division of Advice suggested that, consistent with Banner Health, Verso could modify the remainder of the rule to lawfully advise its employees that:

Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence.  If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

We must note that this is only an Advice Memorandum, and the guidance is not binding on the Board.  Employers should also note that the Banner Health case may not survive the Supreme Court's consideration of the D.C. Circuit's decision in Noel Canning v. NLRB and the Third Circuit's decision in NLRB v. New Vista Nursing and Rehabilitation, LLC.  If the Banner Health decision survives, however, the Verso Advice Memorandum at least provides some insight to employers on how to comply with Banner Health.  Avoid blanket rules and tailor policies to specific facts involved in the employee investigation.