United States: Think Nonunionized Employers Need Not Worry About The NLRB? Think Again.

The past year has seen a significant effort by the National Labor Relations Board (NLRB) to insert itself into the operations of nonunionized workplaces, giving employers throughout the country cause for concern. Historically, the NLRB has focused on unionized workplaces or on those at which an organizing effort is afoot and generally has left union-free employers alone. That appears to be changing, perhaps due to the Board's desire to keep itself relevant in the face of an overall decline in union membership.

In 2012, the NLRB issued decisions in four areas that, until recently, many employers assumed were beyond the NLRB's reach: class action waivers, confidentiality of internal investigations, at-will employment policies and social media policies.

CLASS ACTION WAIVERS

The NLRB rang in the new year with its January 3, 2012 decision in D.R. Horton Inc. that it is illegal to require employees to waive their right to file joint, class or collective claims addressing their wages, hours or working conditions.

In January 2006, the company at issue began requiring all new and current employees to sign a Mutual Arbitration Agreement (MAA) as a condition of their employment. The MAA provided, in relevant part, that all disputes and claims relating to the employee's employment would be determined exclusively by binding arbitration, and the arbitrator would only have the authority to hear the employee's "individual claims."

The issue came before the NLRB because in January 2008, a superintendent attempted to file a collective action under the Fair Labor Standards Act, alleging he and other similarly situated superintendents had been misclassified as exempt. When the superintendent gave notice of his intent to initiate arbitration, the company pointed to the MAA's prohibition against collective or class actions. In response, the superintendent filed an unfair labor practice charge with the NLRB, alleging this prohibition violated the National Labor Relations Act (NLRA) by interfering with employee access to the NLRB and by attempting to prevent employees from engaging in concerted activity for their mutual aid and protection.

The Board agreed on both points, holding that engaging in collective legal action "to redress workplace wrongs or improve workplace conditions [is] at the core of what Congress intended to protect by adopting the broad language of Section 7 [of the NLRA]." Moreover, the Board continued, an employer may not attempt to prevent employees from turning to the NLRB by requiring them to arbitrate all grievances regarding wages, hours and working conditions.

AT-WILL EMPLOYMENT POLICIES

Many employers include in their employee handbook a policy that all employees are employed at-will. Administrative Law Judge (ALJ) Gregory Meyerson took a close look at this standard, and seemingly innocuous, policy in American Red Cross Arizona Blood Services Region and Lois Hampton. There, the employer's policy expressly required the employee to acknowledge that the at-will employment relationship could not be "amended, modified or altered in any way." The ALJ found employees could reasonably interpret that language to mean that they were prohibited from advocating to change their at-will status through a collective bargaining agreement. Therefore, the ALJ concluded, the policy violated Section 7 of the NLRA.

By contrast, the NLRB acting general counsel released two advice memos on October 31, 2012 in which he blessed two at-will employment clauses that did not contain language stating that the at-will nature of employment was unalterable. Instead, one of the clauses in question stated that only the president of the company had the authority to change the at-will employment relationship. The other stated that no company representative had the authority to "enter into any agreement contrary to the foregoing 'employment at will' relationship," but did not require employees to acknowledge the clause. Taken together, these opinions suggest at-will employment policies are not in the Board's cross-hairs per se, but employers should be cautious not to include language in such policies asking employees to acknowledge that the at-will nature of their employment is cast in stone.

CONFIDENTIALITY OF INTERNAL INVESTIGATIONS

On July 31, 2012, the NLRB laid down a general rule that requiring confidentiality during an internal investigation into an employee complaint constitutes an unfair labor practice.

In Banner Health System d/b/a Banner Estrella Medical Center, a divided Board held that "to justify a prohibition on employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees' Section 7 rights." The two-member majority rejected Banner's argument that the prohibition was justified by its interest in protecting the integrity of internal investigations, and ordered Banner to post a notice that the policy had been found to violate federal law.

A "blanket approach" to requiring confidentiality during internal investigations will not suffice, the Board held. Rather, an employer must consider each investigation individually, and decide whether confidentiality is required because witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is a need to prevent a cover-up.

In light of this decision, employers should jettison any general policy against employees discussing with each other ongoing investigations into employee misconduct. This holds true even if the policy carries no threat of discipline for violators. However, employers should continue to insist upon confidentiality in connection with investigations into particularly sensitive complaints, such as those of sexual harassment, discrimination or fraud. Moving forward, employers should work with counsel in analyzing each investigation individually to determine the level of confidentiality required.

SOCIAL MEDIAL POLICIES

For a discussion of the Board's approach to social media policies, see "Social Media and the Workplace: 2012 and Beyond" on page 10 of this newsletter.

These examples illustrate the NLRB's vigor in addressing any and all practices that could be construed as limiting employees' rights under the NLRA. It remains to be seen how the courts will come down on these questions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.