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NLRB Changes Test for Evaluating Employer Workplace Policies

By:  R. Eddie Wayland, TCA Legal Counsel

This past month, the National Labor Relations Board (NLRB) voted in a 3-2 decision to change a component of the test it uses to determine whether an employer’s policies in the workplace violate federal labor law. The decision is one of several recent actions reversing or revising rulings from the Obama era that affect employers, as Republican appointees now hold a majority on the NLRB for the first time since the George W. Bush administration. 

The NLRB applied this new rule to a dispute between an aerospace company and a union that represents many of its engineer employees. Ultimately, the NLRB reversed the decision of an administrative law judge, who had followed the prior Obama-era precedent and found that the employer’s policy restricting the use of cameras in the workplace violated the National Labor Relations Act (NLRA).

Background

Section 7 of the NLRA protects certain kinds of union activity and “other concerted activity for mutual aid and protection.” If a union or group of employees believes that an employer’s workplace policies infringe on these protected activities, it can challenge them by bringing an administrative action before the NLRB. The NLRB, which is tasked with enforcing the NLRA, has the power to review these challenges and determine whether the employer’s policies violate federal law.

The NLRB had previously used a two-step approach when evaluating the legality of employers’ workplace rules under Section 7. First, if the policy at issue explicitly restricts activity protected by Section 7, the NLRB will strike it down as unlawful. Second, if the policy does not explicitly restrict Section 7 activity, a claimant may still prevail by showing one of three things: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule is being applied to restrict the exercise of Section 7 rights.

Changing the Standard

This case concerns the first of the above three factors. After thirteen years of struggling with inconsistent application, the NLRB concluded that the “reasonably construe” standard was “too simplistic” and yet “at the same time . . . too difficult to apply.” The NLRB noted that the standard had been used in the past to strike down innocuous employer policies advising employees to “work harmoniously” or conduct themselves in a “positive and professional manner.” In other cases, rules were struck down simply because they were too ambiguous. The NLRB found that “employees are disadvantaged when they are denied general guidance regarding what standards of conduct are required and what type of treatment they can reasonably expect from coworkers.” The NLRB also observed that the standard did not provide enough room to differentiate between different industries and workplace settings.

To replace the “reasonably construe” standard, the NLRB created a balancing test, in which a workplace policy is to be evaluated based on (1) “the nature and extent of potential impact on NLRA rights” and (2) “legitimate justifications associated with the rule.” This test effectively weighs the strength of two competing interests against each other. The NLRB explained that, under this standard, some rules may be upheld even if they infringe on Section 7 activity if the justifications for the rule are sufficiently compelling. Conversely, other rules may be struck down if the justifications do not outweigh the restrictions on NLRA-protected conduct. Between these two extremes, the NLRB anticipated that some close cases will “warrant individualized scrutiny.”

Using this new standard, the NLRB evaluated the aerospace company’s policy prohibiting certain “camera-enabled” devices on company property, including smartphones. First, the NLRB observed that the company had numerous, weighty justifications for the policy, including protecting proprietary information, performing its required security-related duties as a federal contractor, and preventing a terrorist attack. The NLRB then found that any adverse impact by the “no-camera” rule on protected Section 7 rights is “comparatively slight” when weighed against these “substantial and important justifications.” Accordingly, the NLRB reversed the decision of the administrative law judge and found that the policy did not violate the NLRA.

Takeaway

This case highlights the importance of administrative agencies, both as policymaking bodies and as adjudicators, in the modern legal landscape. The NLRB is empowered by Congress to make rules that employers must follow, if the employer is subject to the NLRA. While these rules carry the binding force of law, they are also more easily subject to change—as an agency may interpret and enforce a statute differently depending on which party controls the White House. Because Republicans recently took control of the NLRB, we have seen several significant changes in recent months and we can probably expect to see more changes in the coming months to policies and procedures instituted during the Obama administration.

Additionally, administrative agencies play an important “quasi-judicial” role, adjudicating particular disputes like the one in this case. In many instances, employees and other plaintiffs are required to exhaust their remedies before an agency in order to bring suit in court, and the agency’s decision can have lasting ramifications on later litigation. Retention of knowledgeable counsel early in the lifespan of legal issues or disputes involving the NLRA and NLRB is critical in helping to ensure that an employer’s rights are fully protected and vindicated, both at the agency level and in court.

R. Eddie Wayland is a partner with the law firm of King & Ballow. You may reach Mr. Wayland at (615) 726-5430 or at rew@kingballow.com. The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.

January 2, 2018

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