NLRB Guidance on Employer Rules To Cause Compliance Headaches, Experts Say

Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...

By Yin Wilczek

April 8 — A recent report by National Labor Relations Board General Counsel Richard Griffin Jr. is raising compliance hackles.

Compliance professionals and labor attorneys told Bloomberg BNA that the March 18 document (Memorandum GC 15-4)—which offers guidance on whether the rules in employer handbooks and other requirements may violate the National Labor Relations Act—casts too broad a net and will create compliance problems for companies.

“I think the NLRB could pretty much attack any company they wanted to, under these very broad interpretations,” said Joseph Murphy, director of public policy at the Society of Corporate Compliance and Ethics (SCCE).

Michael Pavlick, a Pittsburgh-based partner at K&L Gates LLP, described the report as part of the NLRB's continuing effort to “reimagine” NLRA § 7, which protects the rights of employees to engage in union activities.

“The Board is, in many instances, giving benign rules regarding confidentiality, professionalism, anti-harassment, media, proprietary information and the like the most strained construction possible,” Pavlick told BBNA. “It’s a case of if you are looking for trouble, you’ll likely find it.”

The NLRB did not immediately respond to BBNA's request for comment.

Violative Requirements 

Griffin's report is divided into two parts—the first compares employer rules that the NLRB considers violative of the NLRA with rules that are not deemed violative.

The second part discusses the board's recent settlement with Wendy's International LLC in which the company agreed to modify several rules in its handbook that the NLRB found “facially unlawful.”

The corporate rules the NLRB flagged as unlawful under § 7 include:

• Do not discuss “customer or employee information” outside of work, including “phone numbers [and] addresses.”

• “[B]e respectful to the company, other employees, customers, partners, and competitors.”

• “Refrain from any action that would harm persons or property or cause damage to the Company's business or reputation.”

• “[S]how proper consideration for others' privacy and for topics that may be considered objectionable or inflammatory, such as politics and religion.”

 

Murphy observed that the report implicates language that has been used in employer handbooks, codes of conduct and manuals for years. He also told BBNA that despite more than 30 years as an attorney, “I couldn't intelligently explain to a client” the distinction Griffin makes between lawful and unlawful rules.

Before issuing the memo, the NLRB at a minimum should have affirmed the importance of corporate compliance efforts and consulted with the compliance industry instead of “attacking company efforts to do the right thing,” Murphy said.

Too Much Power 

“In my view, it’s dangerous for any government official to have this kind of power where they can go after any company and basically say, ‘Well, an employee could read it as intimidating and therefore you've broken the law and therefore we'll help you rewrite your code of conduct,'” Murphy continued. That could have a significant impact on specific compliance programs as well as on the broader compliance and ethics functions, he said.

Basically, “companies are not going to fight” the NLRB on this, Murphy said. They would prefer to change their requirements rather than suffer the bad press and litigation expenses from NLRB unfair labor practice allegations.

Meanwhile, attorneys said they were not surprised by Griffin's memo considering the enforcement trends that have been developing during the past several years.

“Employee handbooks and codes of conduct have had a bulls-eye painted on them for a couple years now,” Pavlick told BBNA. “The March 18 report of the General Counsel confirms that the Board intends to continue to closely scrutinize handbook provisions.”

Pavlick also agreed that the lawful and unlawful lines drawn by Griffin are “difficult to see with the naked eye.”

“In one instance, an admonition to ‘be respectful' is deemed unlawful, while a requirement to ‘work in a cooperative manner' is lawful,” Pavlick said. “I think it is going to be hard for an employer to draw a meaningful distinction between those two formulations, with the result that unless an employer copies word for word policies that the Board has found lawful—and even that might not be enough, depending on context—there is going to continue to be considerable uncertainty about whether policies are legal or not.”

Heavy Regulation 

Connie Bertram, a Washington-based partner at Proskauer Rose LLP, suggested that Griffin's memo shows the NLRB's “intent to heavily regulate workplace policies, even those with the most tangential connection with organization efforts and collective bargaining.”

Bertram urged companies—especially non-unionized workplaces—to work with labor and employment counsel to audit their existing policies and agreements and to modify potentially problematic requirements.

“It is critical for employers to take a holistic approach to compliance with these requirements,” she added. “A number of agencies”—including the Securities and Exchange Commission and the Department of Labor—“have taken or are considering taking action against employer policies that restrict employees’ right to disclose information to regulators and prosecutors.”

The SEC April 1 announced a first-of-its-kind enforcement action against Kellogg Brown & Root Inc. over a confidentiality agreement that allegedly infringed on federal whistle-blower protections.

Similarly, Pavlick recommended that companies conduct a focused § 7 review of their handbooks with “someone familiar with the positions” the NLRB has taken in recent years.

He added that employers can include specific examples to clarify language that might otherwise be too broad. In addition, context is a “vital consideration,” he said.

“A ban on ‘derogatory comments' in a general code of conduct might be unlawful, while the same ban in an anti-harassment policy could be lawful in context,” Pavlick noted. “Employers also have to be sensitive to employee discipline issues based upon violations of policies which the Board might find questionable.”

For his part, Murphy suggested that companies look to Congress to rein in the NLRB. “They should be going to Congress to prevent this type of abuse,” he said.

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

The report is available at http://op.bna.com/car.nsf/r?Open=ywik-9vdtlv.