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D.C. Circuit Ruling Yet Another Reminder of NLRB’s Handbook Initiative

Three policies in an employer’s handbook violated Section 8(a)(1) of the National Labor Relations Act, the U.S. Court of Appeals for the District of Columbia Circuit has held, agreeing with the National Labor Relations Board. The Court disagreed, however, that two other policies found illegal by the NLRB violated the Act. Hyundai Shipping Agency, Inc. v. NLRB, No. 11-1351 (D.C. Cir. Nov. 6, 2015).

An unfair labor practice charge was filed by a former employee alleging she was terminated for engaging in protected, concerted activities in violation of the NLRA. An NLRB administrative law judge dismissed that allegation, but found seven rules in the employer’s employee handbook violated the Act. On appeal, the Board disagreed with the ALJ’s determination regarding two of the rules, but upheld the ALJ’s decision finding five other rules violated the Act. Hyundai Shipping then appealed to the U.S. Court of Appeals for the District of Columbia.

The Court first determined whether the NLRB had jurisdiction to consider the lawfulness of the five handbook rules. Under Section 10(b) of the Act, the NLRB’s General Counsel may prosecute an unfair labor practice charge by issuing an unfair labor practice complaint, but the complaint’s allegations must be “closely related” to the allegations in the charge. The Court applied the test for determining whether an allegation is “closely related,” which it had established in Dry Plastics & Glass Co. v. NLRB, 44 F.3d 1017 (D.C. Cir. 1995): “the Board looks to whether a complaint allegation (1) involves the same legal theory as the charge allegation, (2) arises from the same factual circumstances or sequence of events as the charge allegation, and (3) raises similar defenses as the charge allegation.” Dry Plastics also establishes how to apply the test. There, the Board adopted the dissenting view of then-Judge Stevens in NLRB v. Braswell Motor Freight Lines, Inc., 486 F.2d 743 (7th Cir. 1973), and held “the Board’s jurisdiction should be tested by the General Counsel’s allegations rather than his proof.”

The Court concluded jurisdiction existed as to four rules the General Counsel claimed caused the employee’s termination, but not as to the fifth rule, which had no link to the termination.

The Court held an oral rule prohibiting employees from revealing information about matters under investigation was unlawful, saying, a “blanket confidentiality rule clearly limit[s] employees’ § 7 rights to discuss their employment…the question is whether Hyundai has presented a legitimate and substantial business justification for the rule, outweighing the adverse effect on the interests of employees.” The Court rejected the company’s argument that federal and state anti-discrimination statutes and guidelines, which require confidentiality in many instances, constitutes such a justification. While recognizing an employer’s obligation to comply with these laws may provide a business justification, a rule banning employee discussion of all investigations is unlawfully overbroad.

The Court also agreed with the Board that two other common handbook provisions were unlawfully overbroad:

  • A confidentiality provision in the electronic communications policy which concluded with, “employees should only disclose information or messages from these [sic] systems to authorized persons.” The Board had held a reasonable employee could read this rule to prevent the sharing of any information exchanged on Hyundai’s electronic communications network, thereby restricting employees’ ability to share information about their terms and conditions of employment.   The Court held the Board’s conclusion was a reasonable application of the existing Board case law.

  • The rule that employees could be disciplined, including terminated, for “[p]erforming activities other than Company work during working hours.”   The Court noted the Board distinguishes between “working time,” which excludes breaks, and “working hours,” the period from the beginning to the end of a shift, breaks and all. Employers may not maintain rules that limit an employee’s right to engage in protected, concerted activity during non-work time.

However, the Court refused to enforce the Board’s order relating to the rule that, in the Court’s parlance, “urged” employees to voice their complaints to their immediate supervisor or Human Resources: Voice your complaints directly to your immediate superior or to Human Resources through our “open door” policy. Complaining to your fellow employees will not resolve problems. Constructive complaints communicated through the appropriate channels may help improve the workplace for all.

In distinguishing the rule from similar rules the Board had found unlawful, the Court noted that, while the rule urged employees to raise complaints with their supervisor or HR, it was “neither mandatory nor preclusive of alternatives….”

This decision is a welcome reminder that although broad, the NLRB’s jurisdiction is not without limits. The decision also is an important reminder the NLRB’s initiative on employer’s handbook rules and policies is alive and well and that employers should have their rules and policies reviewed on a regular basis to keep up with changes in the law. Moreover, as this case demonstrates, an unfair labor practice charge alleging an unlawful termination can morph into a complaint claiming that an employer unlawfully maintained unlawful rules and policies, another compelling reason to ensure policies and rules can withstand an NLRB review.

Jackson Lewis P.C. © 2019

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Jeffrey W. Toppel, Employment Attorney,  wrongful termination, Jackson Lewis Law Firm
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Jeffrey W. Toppel is a Principal in the Phoenix, Arizona, office of Jackson Lewis P.C. He represents employers in a wide range of employment-related disputes, including wrongful termination and discrimination claims before various state and federal governmental agencies, as well as the entire spectrum of NLRB, general labor relations and employee relations matters.

Mr. Toppel also represents parties in restrictive covenant and trade secret litigation. In addition to his litigation practice, Mr. Toppel regularly advises employers on issues that arise in the...

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Philip B. Rosen Jackson Lewis  Preventive Practices Lawyer & Collective Bargaining Attorney
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Philip B. Rosen is a Principal in the New York City, New York, office of Jackson Lewis P.C. He is a member of the firm's Board of Directors and co-leads the firm's Labor and Preventive Practices Group. He joined the firm in 1979 and served as Managing Partner of the New York City office from 1989 to 2009.

Mr. Rosen lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media, reorganizations and reductions-in-force, purchase/sale transactions, sexual harassment and other workplace conduct rules, compliance with the Americans With Disabilities Act, wrongful discharge and other workplace litigation, corporate campaigns and union organizing matters, collective bargaining, arbitration and National Labor Relations Board proceedings. He has been quoted by the press on many labor matters, including the National Labor Relations Board’s recent initiatives on protected concerted activity and the proposed Notice Posting requirements.

Mr. Rosen has extensive experience advising clients developing integrated corporate-wide labor relations strategies - whether the organization is union-free, partially unionized or entirely unionized. He has led teams conducting multi-facility labor-related legal assessments where clients are seeking to develop creative, strategic legal approaches which anticipate major issues and achieve a company’s labor relations goals. Mr. Rosen also has advised clients being confronted with corporate campaigns and requests for neutrality agreements. He has represented organizations seeking to maximize management rights through their development of pro-active employee relations approaches to remain union-free. He also has advised unionized organizations on lawful negotiating strategies – in situations ranging from “hard bargaining” to recapture management rights to more “cooperative” negotiations – in all cases, providing legal advice designed to assist clients in achieving their primary goals.

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Howard Bloom, Jackson Lewis, labor union attorney, unfair practice investigations lawyer, employment legal counsel, bargaining law
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Howard M. Bloom is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He has practiced labor and employment law representing exclusively employers for more than 36 years.

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