Union-Free Companies Come Under Microscope

Written by Robert G. Brody and Rebecca Goldberg on January 25, 2013

The Connecticut Law Tribune

January 25, 2013

 

Most union-free employers never give a second thought to the National Labor Relations Board (“NLRB”) unless a union is knocking at the door.  Last year tells us that is a mistake.  The NLRB, the federal agency responsible for enforcing the National Labor Relations Act (“NLRA”), previously focused almost exclusively on union-related issues.  Employers with no union or organizing activity had little reason to concern itself with the NLRB, but that is no longer true.  With declining unionization rates in the private sector,—only 6.9 percent of private-sector employees were unionized in 2011— the NLRB is struggling to redefine its role so it can reassert its relevance.  Focusing on union-free employers is their answer.

In the past two years, the NLRB has focused on union-free employers by (1) enacting changes to election rules (some of which have been struck down by courts) to make it easier for employees to unionize and (2) scrutinizing all employers’ policies and disciplinary decisions.  This article focuses on the latter set of changes.  While much has been written about the NLRB’s recent interest in social media policies and related discipline, other employment policies merit just as much concern.

Employment at Will Policies

One of the most controversial NLRB moves involves at-will employment, that hallowed institution that is the law in 49 states.  (Montana is the only exception.)  Employment at will means that unless an employment contract states otherwise, employers may terminate employees for any reason except an unlawful one, such as race discrimination.  Employment at will policies appear in many employer handbooks simply to confirm that the handbook is not a contract.  Many policies also state that any contract to change the at-will status of an employee must be in writing, signed by a particular member of management.  The purpose of this caveat is to ensure casual remarks are not misconstrued as an employment contract.

Employment at will policies have been common practice for decades, but the NLRB has now challenged their legality in two cases.  In American Red Cross Arizona Blood Services Division, an administrative law judge found an employment at will policy “overly broad,” claiming employees would “reasonably construe the language to prohibit Section 7 activity,” the right of employees—whether unionized or not—to engage in collective (concerted) activities for the purpose of mutual aid and protection.  The offending language was essentially the same as language appearing in countless company handbooks:

“I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.”

In another case, the NLRB challenged Hyatt Hotels’ at-will policy, which indicated that an employee’s at-will status could be changed only by “a written statement signed by [the employee] and either Hyatt’s executive vice-president/chief operating officer or Hyatt’s president.”  Although the case settled with Hyatt Hotels rescinding its policy, the NLRB has made it clear that it will go after similar employer policies.

The NLRB’s problem with such statements is employees might think forming a union would be futile, since the at-will employment relationship, according to the handbook, cannot be altered or can only be altered in a writing signed by the employee and the company.  In addition, using the pronoun “I” in a policy, as occurred in the American Red Cross Arizona Blood Services Division case, could lead the NLRB to treat the policy as a waiver of the employee’s rights which is not permitted.

Based on the NLRB’s reasoning, if a company’s at-will language explains that an employee’s status can be modified in a writing signed by both the company and either the employee or someone acting on the employee’s behalf, that might satisfy the NLRB’s concerns.  In addition, the NLRB Acting General Counsel recently issued two advice memoranda upholding employment at will policies.  One policy explained that managers, supervisors, and employees lacked authority to change the at-will relationship and only the company’s president could do so.  Another policy stated that no company representative could change the at-will relationship.  The latter policy is problematic in that it implies that under no circumstances, including unionization, could any company representative enter into a collective bargaining agreement.  While the NLRB’s own advice memorandum approved this policy, the advice memorandum is not binding, and an NLRB judge could rule otherwise.

Confidentiality of Workplace Misconduct Investigations

Another extremely controversial move by the NLRB involves internal workplace misconduct investigations.  Common sense dictates that employers should endeavor to maintain confidentiality when investigating workplace misconduct.  Confidentiality helps employers conduct reliable investigations and maintain order in the workplace by preventing witnesses from aligning their stories, preventing destruction of evidence, preventing harassment of a complaining employee, and avoiding unnecessary workplace distractions.  The Equal Employment Opportunity Commission (“EEOC”) has even issued guidance stating that all anti-harassment policies should provide “assurance that the employer will protect the confidentiality of harassment complaints to the extent possible.”

Now, the NLRB is challenging the conventional wisdom.  A July 2012 NLRB decision, Banner Health System d/b/a Banner Estrella Medical Center and James A. Navarro, held that employers may not instruct employees to keep a matter confidential while it is under investigation, unless there is a “legitimate business justification” for that instruction.  According to the NLRB, an employer’s “generalized concern with protecting the integrity of its investigations” is insufficient.  Instead, the employer must have some specific concern about that particular case.  This must be determined on a case-by-case basis.  In effect, an employer will need to predict at the outset of an investigation that a special need for confidentiality exists.  Unfortunately, most employers lack such clairvoyance.

Surprisingly, the EEOC may also be reversing course on its own guidance and joining the NLRB.  Anecdotes are popping up in which the EEOC suggests that policies warning employees not to discuss matters under internal investigation might violate laws protecting employees who oppose discrimination.  For example, if a witness to sexual harassment tells other employees about the incidents while it is being investigated and also participates in the investigation, she would have violated the confidentiality policy by openly opposing the sexual harassment.  Needless to say, this is a tortured example, but that is what the EEOC is saying.

While the EEOC has not changed its official guidance yet, employers should be on the lookout for this possibility.  While such a change would help reconcile the EEOC’s position with the NLRB’s position, employers will still have to deal with the possibility of tainted investigations, distracting gossip, and retaliatory harassment.  Moreover, employees who wish to complain of harassment might be afraid of these consequences and refuse to come forward.  The only positive note is that if the matter does not involve harassment, the EEOC’s guidance is not applicable, and employers would only need to avoid requiring confidentiality to satisfy the NLRB’s concerns.

For now, there is no easy answer for employers.  Where a legitimate business justification for confidentiality exists, employers should impose confidentiality, but should consult counsel first.  In an ordinary situation, the employer may choose to conduct the investigation quickly in order to avoid destruction of evidence and alignment of stories, but will have a difficult decision as to whether to require confidentiality.  Of course, employers may directly prohibit employees from destroying evidence and harassing employees.

Future Direction

The future direction of the NLRB is becoming clear in light of the recent presidential and legislative elections.  All NLRB seats will become open at some point during the next presidential term.  With President Obama’s re-election and Democrats maintaining control of the Senate, it is likely new appointees will lean left.  While Congress can pass legislation to overrule the NLRB’s decisions and rules, such attempts are rarely successful, and are not likely when Republicans only control the House of Representatives.

With a more liberal composition of the federal government, the NLRB will likely continue its efforts to change election rules to make unionization easier and to focus on union-free employers.  Richard Trumka, President of the AFL-CIO, a federation of unions representing more than 12 million employees, recently predicted that “card check” legislation would pass in Obama’s second term, despite its failure during his first term.  Also known as the Employee Free Choice Act, card check legislation allows unionization by ambush.  Employees would lose the right to vote for or against unionization under secret ballot.  Once a majority of employees sign union cards, no election would be held and the union would be recognized upon presenting these cards to the NLRB.  This could happen even if the employer had no idea this activity was occurring!  This is a major threat to all businesses and we will continue to monitor it.  .

In addition to possible changes in the election process, employers need to remember the NLRB has authority in the union-free sector and they should monitor developments so they can remain in compliance.  The NLRB has focused on issues relating to the ability of employees to engage in protected concerted activity.  Employers should look at their policies and practices to identify any language that could make employees think they are not allowed to discuss the terms and conditions of employment, whether with co-workers or outsiders.  Any such policies should be closely scrutinized with the assistance of a competent labor attorney.  Otherwise, your policy may be the next NLRB cause célèbre.

About the Authors

Robert G. Brody is the founding member of Brody and Associates, LLC. He has been quoted and published in national publications and appears as a guest T.V. commentator on contemporary Labor and Employment issues. Learn More