It's Time To Review Your Company's Work Rules: National Labor Relations Board Holds That Union-Free And Unionized Employers Cannot Prohibit Employees From Having "Negative Conversations" About Their Managers

Monday, August 1, 2005 - 01:00

Many "union-free" employers fail to pay attention to the National Labor Relations Act ("NLRA"), the federal law that gives employees the right to engage in concerted activity (e.g., join a union). To these employers, the NLRA is of little significance because their employees are not presently unionized; thus, they do not have labor relations issues. The reality, however, is that companies in every sector of the economy, union-free or unionized, have labor relations issues and need to review their work rules and policies to prevent a challenge under the NLRA. The ever-changing landscape of union representation in the United States, which has declined to less than 8% of private sector employees, has led to a more aggressive challenge to employer work rules by unions in order to exert legal pressure on employers. Violations of the NLRA have been found based on the mere maintenance of an overly broad work rule even if the work rule was not enforced. For example, in June 2005, the National Labor Relations Board ("NLRB" or "Board"), the federal agency that enforces the NLRA, held that an employer's overbroad work rule prohibiting employees from having "negative conversations" about their managers violated the law. Moreover, if the unknowing employer is found to have violated the NLRA, it could be ordered to post a remedial notice to employees at its facility that it violated the law and that federal law protects its employees' right to unionize or refrain from unionizing. The remedy could be a company-wide posting if the unlawful work rule was widely disseminated via an employee manual or over the company intranet.

As is clear from the discussion below, all employers must review their work rules, regardless of how innocuous the work rules may appear or how infrequently they are enforced.

The Law

There are numerous decisions by the NLRB holding that the mere maintenance of an overly broad work rule violates the law.

In the seminal decision of Lafayette Park Hotel (1998), the NLRB held that to determine whether the mere maintenance of certain work rules violates the NLRA, "the appropriate inquiry is whether the rules would reasonably tend to chill employees in the exercise of their Section 7 rights [under the NLRA to engage in concerted activity, e.g., unionize]." Under this standard, the NLRB held that the Hotel's rule prohibiting employees from "[m]aking false, vicious, profane or malicious statements toward or concerning the Lafayette Park Hotel or any of its employees," violated the law because it did not clearly define what conduct is permissible for employees. The NLRB reasoned that if employees do not know what they are permitted to do, then they might refrain from exercising their lawful right to take concerted action and/or unionize.

Moreover, the NLRB held that the Lafayette Park Hotel also violated the NLRA by maintaining a rule which stated "[e]mployees are required to leave the premises immediately after the completion of their shift and are not to return until the next scheduled shift." The Hotel failed to provide a legitimate business reason for keeping off-duty employees from visiting outside nonworking areas. (Under the NLRA, it is unlawful for an employer to maintain a rule which denies off-duty employees entry to parking lots, gates, and other outside nonworking areas, unless there is a legitimate business reason for the rule.)

In November 2004, the NLRB revisited the Lafayette Park Hotel decision in Lutheran Heritage Village-Livonia (2004) and clarified its analysis.

In determining whether a challenged rule is unlawful, the Board must, however, give the rule a reasonable reading. It must refrain from reading particular phrases in isolation, and it must not presume improper interference with employee rights. (citation omitted). Consistent with the foregoing, our inquiry into whether the maintenance of a challenged rule is unlawful begins with the issue of whether the rule explicitly restricts activities protected by Section 7. If it does, we will find the rule unlawful. If the rule does not explicitly restrict activity protected by Section 7, the violation is dependent upon a showing of one of the following: (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 has been applied to restrict the exercise of Section 7 rights.

In Lutheran, an administrative law judge (who initially heard the case before it was appealed to the NLRB) held that the mere maintenance of work rules prohibiting "abusive and profane language," "verbal, mental and physical abuse," and "harassment. . . in any way" were unlawful. On appeal, the NLRB applied the above test and reversed the administrative law judge. It held that these rules could not reasonably be understood as interfering with employees' rights. The NLRB refused to find that a reasonable employee would read the rules to prohibit Section 7 activity "simply because the rule could be interpreted that way." Put simply, the NLRB said there was no reasonable link between prohibiting the abuse/harassment of others and the use of foul language, and having the right to unionize.

In February 2005, the NLRB issued a significant decision in Delta Brands, Inc. (2005) in which it rejected the notion that the mere maintenance of an overly broad rule, without more, is objectionable conduct that warrants setting aside an election. Rather, the NLRB "looks to all of the facts and circumstances to determine whether the atmosphere was so tainted as to warrant the setting aside of the election." The NLRB refused to set aside a representation election (10 to 8 against unionization) due to the existence of an overly broad no-solicitation rule because (1) the rule was not adopted in response to the union's organizing effort; (2) it was part of a 36-page employee handbook; (3) there was no evidence the company called employees' attention to the rule; and (4) there was no evidence that the company "enforced the rule or that any employee was in fact deterred by the rule from engaging in Section 7 activity." (Prior to Delta Brands, there was an NLRB decision that an employer's mere maintenance of an unlawful rule is sufficient grounds to set aside an election.)

On June 7, 2005, in Guardsmark, LLC (2005), the NLRB found that a "Chain-of-Command" work rule requiring employees to bring complaints about workplace issues directly to their supervisors violated the NLRA. The "Chain-of-Command" rule states:

GENERAL ORDERS, Paragraph 5: While on duty you must follow the chain of command and report only to your immediate supervisor. If you are not satisfied with your supervisor's response, you may request a meeting with your supervisor and his or her supervisor. If you become dissatisfied with any other aspect of your employment, you may write the Manager in Charge or any member of management. Written complaints will be acknowledged by letter. All complaints will receive prompt attention. Do not register complaints with any representative of the client.

The NLRB interpreted this work rule to "entrench upon the right of employees under Section 7 [of the NLRA] to enlist the support of an employer's clients or customers regarding complaints about terms and conditions of employment." Simply put, what appeared to be an employer's innocuous attempt to implement an internal complaint procedure and insulate its clients/customers from hearing such internal complaints, was interpreted by the NLRB as interfering with employee rights. Evidently, the NLRB believes that employees' right to speak about their terms and conditions of employment with the employer's clients/customers trumps the potential negative impact on the employer's reputation and overall client/customer relations.

On June 16, 2005, in Claremont Resort and Spa (2005), the NLRB held that an employer violated the law by maintaining a work rule prohibiting employees from having "negative conversations" about their managers. The NLRB concluded that employees could reasonably construe this rule to "bar them from discussing with their co-workers complaints about their managers that affect working conditions, thereby causing employees to refrain from engaging in protected activities." Once again, it appears that the NLRB focused on the fact that the work rule was overbroad and did not define "negative conversations."

Most recently, on June 30, 2005, the NLRB's decision in Cintas Corporation (2005) held that the employer violated the law by maintaining a confidentiality rule including:

We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its partners, new business efforts, customers, accounting and financial matters.

The NLRB determined that employees (a/k/a "partners" as referenced in the rule) could reasonably construe the prohibition against the release of "any information" to restrict their discussion of wages and other terms and conditions of employment with fellow employees and with the union.


Once a violation is found, the remedies for violating the NLRA are clear. The typical remedy is to require an employer to rescind the unlawful policy and post a Notice to Employees for 60 days at its facility where the rule was in effect. If the unlawful rule was widely disseminated to multiple facilities, there is NLRB precedent mandating a wide-scale notice posting at every facility where the rule was in effect. If the challenge to the unlawful rule was lodged during a union organizing drive, then the potential remedy could also include setting aside election results cast against union representation.

The Practical Application

For those employers who choose not to perform annual reviews of their work rules and/or employee manual, they could be sitting on a ticking time bomb. At any moment, a union organizing drive led by a few disgruntled employees at a remote facility could spur organizing at multiple employer facilities. For example, the mere existence of an overbroad work rule in an employee manual (even if unknown and unenforced) can turn an organizing drive for a handful of employees in New Jersey into the employer having an affirmative obligation to post a notice at its facilities across the United States informing employees of their protected right to organize.

In addition to labor relations issues, it is imperative that employers annually review their work rules and/or handbooks to ensure legal compliance with federal and state laws. At bare minimum, all employers need to have an effective anti-harassment policy in place in order to minimize legal exposure in the event of an action alleging unlawful harassment.

It's a simple process to review work rules; however, many employers fail to do so under the misconceptions that "our lawyers wrote it a few years ago" or "we've never had any problems with the work rules." Other employers just don't make it a priority in light of more pressing business demands. A phone call to your experienced employment/labor counsel could help alleviate these concerns for your company.

Alan I. Model is a Principal in the law firm of Grotta, Glassman & Hoffman, p.c. He advises companies throughout the country in all aspects of employment law and labor relations. For more information about this topic, contact Mr. Model at (973) 994-7537.

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