The National Labor Relations Board (the "Board") has picked up the pace on implementing the Biden administration's pro-labor agenda, issuing a decision and proposing a new rule that could significantly affect how companies must operate. These policy changes, in combination with a recent circuit court decision, indicate that the tides have officially changed.

Uniform Rules Now Unlawful? Not Quite, but Employers Beware

On August 29, 2022, the Board found that a car manufacturing facility in California maintained an unlawful uniform policy because the policy implicitly prevented employees from wearing union insignia. See Tesla Inc., 32-CA-197020. In that case, the Board held that if an employer interferes in any way with its employees' right to display union insignia, the employer has the burden of establishing "special circumstances" justifying the interference. Indeed, to the current Board, requiring employees to wear uniforms or "other designated clothing" is per se interference and must have a clear business justification to be lawful.

In the case cited above, the company operated an assembly factory for which it maintained specific uniform requirements through the company's "Team Wear" policy. Under the policy, production associates and leads had to wear company-issued cotton shirts and pants to ensure clothing was "mutilation-free" (e.g., no buttons, zippers, pins). Associates wore black shirts so that they were easy to identify on the floor. The company-issued shirt had the company logo. On occasion, the company would allow an employee to wear an all-black, plain cotton shirt, so long as it was mutilation-free and had no other designs or logos.

In 2017, during a union organizing campaign, employees started wearing black cotton shirts with a union insignia on the front and back. In accordance with its Team Wear policy, supervisors instructed employees that they could not wear the black shirts with the union insignia. Importantly, the company did not prohibit employees from wearing union stickers on their company-issued shirts. The union filed an unfair labor practice charge, alleging that the Team Wear policy violated the National Labor Relations Act (the "Act").

The Board, in a 3-2 decision, found that the policy itself was unlawful. It explained that "any limitation on the display of union insignia is presumptively unlawful regardless of whether an employer permits other related Section 7 activity." Maintaining a policy that "implicitly" prohibits union insignia, such as a policy requiring employees to wear specific company-issued uniforms, violates the Act, unless the employer can prove special circumstances. While visual identification (e.g., uniform color) and preventing damage to products (e.g., requiring mutilation-free clothing) can constitute "special circumstances," the Board found that the company did not prove that the Team Wear policy was "narrowly tailored" to respond to a special circumstance. Managers could still visually identify associates because they were wearing black, and there was no evidence that shirts with the flat, union logos had ever damaged any vehicle.

In a sign of times to come, the Board also chipped away at the current standards generally governing workplace policies. As we previously reported, in 2017, the Board under the Trump administration established the Boeing Test for determining whether a facially neutral (i.e., does not explicitly restrict the right to engage in concerted activity for mutual aid or protection) work rule is lawful. This decision helped clarify how the Act intersects with employee policies and handbooks.

In Tesla, the Board expressly held that the Boeing Test does not apply if the policy implicitly interferes with employees' right to display union insignia. In other words, depending on the effect a policy could have on an employee's ability to display union insignia, a different, more stringent test will apply. As predicted, and consistent with one of General Counsel Abruzzo's stated objectives, the Board has taken a leap forward in dismantling the prior Board's attempts to standardize and clarify the types of policies an employer may maintain.

What This Means for Employers

This decision applies retroactively, so it is vital that employers, particularly those with very strict uniform policies or company-issued uniforms, assess their current uniform rules as soon as possible. When evaluating uniform requirements, employers should consider whether there are "special circumstances" justifying any restrictions that could interfere with an employee's ability to display union insignia. Employers must also ensure that any such restrictions are "narrowly tailored" to those special circumstances.

As an example of the broad reach of this decision, requiring employees to wear a company-issued hat with the employer's logo could now be found to implicitly interfere with the employee's right to wear a hat with a union logo. While many employers have maintained this type of policy in the past without second thought, this new holding means that even the most standard uniform requirements require a fact-intensive inquiry. Consulting legal counsel is the best way to determine what, if any, policy modifications may be necessary.

As a reminder, the Act applies regardless of whether the employees are in a union or are participating in a union organizing drive. Further, protected employee speech is not just limited to union insignia. While union-related messaging has special protections, employees generally have a right to engage in a broad range of speech that is related to their working conditions. As explained in the next section, the Board continues to expand what constitutes protected speech.

Can an Employer Discipline an Employee for Using Vulgar Language? It Depends

In Constellium Rolled Products, 371 N.L.R.B. No. 16 (2021) the Board was confronted by a possible conflict between the National Labor Relations Act and anti-discrimination laws. An employee openly defaced the employer's overtime sign-up sheet with the phrase "whore board." The employer discharged the employee for the insubordinate conduct of vandalizing company property with vulgar, gender-discriminatory language in violation of the company's anti-harassment policy. The employee's union filed a charge with the Board, alleging that the employee's conduct was protected by Section 7 of the Act. The Board agreed and held that the discharge violated the Act. The employer appealed to the U.S. Court of Appeals for the District of Columbia Circuit, which, in turn, remanded the case to the Board for a clearer explanation of how it resolved the apparent conflict between the Act and the state and federal anti-discrimination laws.

In its second go-around, the Board convinced the Court that despite the offensive and gendered language, the Board could sufficiently address the conflict between an employer's anti-discrimination obligations and employee rights under the Act by applying the test it traditionally uses to resolve whether the discipline/discharge of an employee was due to union animus. Notably, Lauren McFerran (now the Chair of the current Board) wrote a concurrence explaining that, in her opinion, the underlying decision did not have to resolve any conflict between the Act and anti-discrimination statutes because writing "whore board" one time could not plausibly violate anti-discrimination laws. Her concurring opinion offers a window into the direction the Board may go now that McFerran is in the majority.

What This Means for Employers

Under Section 7 of the Act, employees have "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." (Emphasis added.) The conflict between employees' rights to engage in protected activities and employers' obligations to maintain a workplace free of unlawful discrimination and hostility are not new. That said, the fact that an employer could face liability for disciplining an employee who uses racially harassing or vulgar, sexist language while engaged in an activity protected by Section 7 of the Act means that employers must take special care when resolving these conflicting principles of the law.

For example, what should an employer do if an employee insults their supervisor in a social media post because the employee is unhappy about a general pay raise, and uses a racist epithet in the process? What if a group of employees are in the break room complaining about mandatory overtime, and start referring to the plant manager in a sexually offensive manner?

Here are some general guidelines to avoid the mistakes that employers can make in these situations:

  1. Apply civility rules consistently and fairly. If an employer can show that it disciplined other employees for similar misconduct outside the context of activity protected by the Act, it will be more difficult to prove that the employee's concerted activity was the motivating cause for the employer's response.
  2. Train supervisors and managers to recognize potential Section 7 activity and when to involve senior managers in making decisions.
  3. Take a step back to assess the situation. Reach out to counsel when in doubt. When employee misconduct involves abusive or vulgar language, employers want to move quickly, lest it foments other complaints. However, when it comes to potential protected activity, it is important to analyze all sides of the issue and obtain all of the facts so that a well-thought-out decision can be made.
  4. Take care to avoid doing anything that can indicate that the decision was driven by union animus.

Are Temporary Employees Supplied by a Staffing Agency Your Employees? The Board's Proposed Rule May Say They Are

On September 6, 2022, as promised, the Board released a new draft regulation modifying the joint employer standard. As we highlighted in a prior Alert, the Biden-era Board, with a 3-2 pro-union majority, made clear that the Trump-era Board's joint employer regulation was on the chopping block. The Board has now taken a significant step toward codifying a broad standard for defining employer-employee relationships.

Companies utilize workers supplied by another employer for a variety of reasons, such as contracting with a staffing company or temp agency to supplement their workforce during busy times or engaging subcontractors to perform certain functions on a permanent basis, like IT or human resources. Whether a company is a joint employer of these workers will determine whether the company is liable for actions and inactions of the supplier of the worker.

Under the Trump-era rule, which went into effect April 27, 2020, a company will not be a joint employer of the workers unless it has and exercises direct and immediate control over one or more of the essential terms and conditions of employment of the worker. Applying this to a staffing company example, so long as the host company did not exercise direct control over one or more of the terms and conditions of the worker, such as the worker's rate of pay, the host would not be a joint employer of the worker.

The Board's proposed rule would substantially broaden the circumstances under which a host company is deemed a joint employer of a worker supplied by another company. As proposed, the rule would redefine "joint employer" as an entity that possesses or has retained the authority to control, whether directly, indirectly or both, one or more of the employee's essential terms and conditions of employment, regardless of whether the control is actually exercised. This could be as simple as having the authority to assign the worker's shifts or schedule.

Importantly, the proposed rule also expands the definition of "essential terms and conditions of employment" to include workplace health and safety. The proposed rule does not exempt health and safety conditions mandated by the Occupational Safety and Health Act, putting every host employer at risk of being found to be a joint employer. Consequently, workers who are presently considered to be employed solely by another employer (e.g., staffing company) would be entitled to the protections of Section 7 of the Act, including the right to engaged in concerted activity, such as unionization.

What This Means for Employers

While the Board may revise the proposed rule in response the public feedback, companies and employers should anticipate that the final rule will make the possession or retention of the indirect right of control over at least one of the terms or conditions of a worker's employment sufficient to establish a joint employer relationship. Although we cannot predict when the Board will release its final rule, companies should begin evaluating (and revising as necessary) contracts, policies and conduct that could make it the joint employer of workers it presently considers employees of another company. Employers should also consider sending to the Board its comments regarding the proposed rule. The deadline to submit comments is November 7, 2022, and the deadline to submit reply comments is November 21, 2022.

Board law is often a barometer for other federal agencies, such as the IRS, and Board regulations hold persuasive value in various judicial or quasi-judicial forums. Companies and organizations should take steps now to get ahead of this looming change.

For More Information

If you have any questions about this Alert, please contact Eve I. Klein, James R. Redeker, Elizabeth Mincer, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.