NLRB General Counsel Applies Rule of Reason to Workplace Rules

The National Labor Relations Board’s General Counsel Peter Robb (“GC”), through his office’s Division of Advice, recently provided welcome guidance to employers wanting to adopt, and enforce, some common (and common sense) workplace rules. In two published memos, the GC explains that it is lawful for employers to:

• require employees to cooperate in workplace investigations,
• require employees to maintain a professional appearance, free of “[a]ny . . . inappropriate commercial advertising or insignia,”
• define confidential information to include business plans, internal correspondence, customer lists, and personally identifiable customer and employee information and prohibit employees from
• disclosing such information, and
• prohibit employees from communicating with the media on behalf of the employer. 

The Boeing Standard

To recap, in the Boeing decision issued in December 2017, the National Labor Relations Board established a new standard for evaluating workplace rules. Rules were divided into three categories:

Category 1 rules: lawful because, when reasonably interpreted, they either don’t prohibit or interfere with (a) employees’ rights to organize under Section 7 of the National Labor Relations Act or (b) the employer’s legitimate justifications outweigh the potential impact on those rights.

Category 2 rules: “warrant individualized scrutiny” to determine whether the rule would prohibit or interfere with employees’ Section 7 rights and, if so, whether the employer’s justification outweighs any impact on those rights.

Category 3 rules: either expressly “prohibit or limit” employees’ Section 7 rights, or the employer’s justification does not outweigh the impact on those rights.

Advice does not have the authority to change these categories, but it can interpret them – as they have done in the advice memos. Although the advice is not binding on the NLRB, it is persuasive not only with the NLRB, but also with regional staff and the courts.

What the GC Approved

In Nuance Transportation, the employer told an employee, who reported misconduct but refused to provide supporting information, that “employees are expected to participate in investigations of wrong-doing and refusing to do so is considered insubordination” and that “failure to do so” could lead to termination. When the employee refused to cooperate, the employer fired her. The employee filed an unfair labor practice charge alleging that the requirement to cooperate was an unlawful infringement on her Section 7 rights.

The General Counsel noted the important distinction between mandatory participation in investigations that involve an employer’s alleged unfair labor practices and investigations of alleged violations of company rules. As to the former, an employer cannot compel cooperation; but employers may lawfully require employees to participate in investigations of alleged misconduct.

Applying the Boeing standard, the GC concluded that the employer’s rule was lawful. 

"[E]mployees would not reasonably read a rule merely requiring cooperation with employee investigations to require participation in unfair labor practice investigations . . . when read in context with other provisions."

In ADT, LLC, the union representing the employees alleged certain rules introduced by a successor employer were unlawfully overbroad. The GC concluded that, applying Boeing, three rules were lawful.

• Dress Code: The employer prohibited employees from wearing“[a]ny items of apparel with inappropriate commercial advertising or insignia.” Because the rule was “one bullet-point line of a two-page rule that has the theme of ‘maintaining a professional, business-like appearance’” the rule could not reasonably be read to prohibit union insignia. Regardless, given the slight impact to employees’ rights, the stated justification for the rule was sufficient to pass the Boeing test.
• Confidential Information: The definition of – and rule protecting – confidential information was lawful. As with the dress code, employees would not reasonably interpret the rule to restrict protected communications (for example, employees could still share addresses without accessing or divulging confidential information). Moreover, the employer’s business interest in protecting confidential information was sufficient to outweigh the employees’ “strong interest in disseminating employee contact information[.]”
• Media Relations: This rule advised employees that “[A]ll information provided to media, financial analysts, investors or any other person outside the [Employer] may be provided only by [Employer] designated spokespersons or [Employer] officers.” In approving the rule, the advice memo recognizes employer’s legitimate business justification for controlling the distribution of, and the appropriate messaging for, communications related to its financial matters. Because the rule, read in the appropriate context, was not susceptible to an unlawful reading, the business need outweighed any impact to the employees’ rights under the Act.

What the GC Rejected

Applying the Boeing standard, the GC found the following rules to be unlawful.

• A rule prohibiting employees from sharing payroll information.
• A rule prohibiting all “non-business use” of the employer’s email system, or using email for matters that did not “promote the [employer’s] objectives” was not only unlawfully overbroad, but it conflicted with a policy that allowed limited personal use of the email.
• A rule prohibiting personal cell phone use because it prohibited employees from using their phones to communicate with each other regarding, or take photographs to document workplaces concerns, during non-work hours.

Although the advice memos are filled with factual nuance and don’t answer many other questions many employers may have, they do provide sorely needed guidance for employers wanting to adopt rules that can be enforced without running afoul of the National Labor Relations Act. Our understanding of the law continues to evolve, as do the laws themselves, so it is prudent to have workplace rules reviewed by legal counsel on a regular basis – or when newly adopted.