NLRB LogoMemos provide guidance on a variety of topics, including employer confidentiality policies and arbitration agreements

As you may recall from our previous blog posts, National Labor Relations Board (“NLRB” or “Board”) advice memoranda are issued by the agency’s Division of Advice, which is part of the NLRB’s Office of the General Counsel (the “General Counsel”).  The purpose of advice memoranda is to provide guidance to NLRB regional offices when presented with novel or complex fact patterns on how the National Labor Relations Act (“NLRA”) should be interpreted and applied to those fact-specific situations.  Although they are non-binding and non-precedential, advice memoranda are regarded as authoritative guidance from the General Counsel, and often indicate how the Board may interpret the NLRA in the future.  Advice memoranda are confidential and non-public when issued, but the NLRB often releases them to the public once the matter in which they arose has resolved.  Accordingly, it is not uncommon for memos to be released years after they are written.

On January 15, 2020, the General Counsel released eight “new” advice memoranda.  Several of the recently-issued memos precede more recent relevant and important legal developments, impacting their interpretative significance.  However, the memos offer valuable insight into the General Counsel’s deliberative and interpretative processes.

Below is a summary of the recently-released memos, each which notes the date the General Counsel originally issued the memo, and an explanation of how each should be considered in the context of current NLRB precedent.

Employer arbitration agreements must not prohibit filing of Board charges

In Bristol Farms (issued 9/30/13), the General Counsel found an employer’s voluntary arbitration agreement under which employees waived their right to pursue class and collective action litigation violated Section 7 of the NLRA in two ways.  (Section 7 grants employees the right to act collectively to improve the terms and conditions of their employment.)  First, the General Counsel stated that participating in employment-related class or collective actions is a right guaranteed by Section 7, and requiring employees to waive this purportedly substantive right violates the NLRA.  However, as you no doubt recall, in 2018, the United States Supreme Court announced in Epic Systems v. Lewis (which we blogged about here) that the Federal Arbitration Act (“FAA”) authorizes employers to enter into arbitration agreements with their employees (even as a mandatory condition on future employment) and that the inclusion of class and collective action waivers does not violate the NLRA because these are not rights guaranteed by Section 7 or any other aspect of the NLRA.  As the Board is now bound to follow this precedent, this part of the Bristol Farms memo is, therefore, outdated and should not be considered authoritative on this particular issue.  But the memo’s significance does not end here.

In the memo’s second part, the General Counsel stated that Bristol Farms’ arbitration agreement also violated Section 7 because it could be read to prohibit employees from filing unfair labor practices (“ULP”) charges with the NLRB.  The arbitration agreement at issue contained expressly-stated exceptions to arbitration for filing unemployment or workers’ compensation claims, which the memo states impliedly meant that all other forums for recovery, including the NLRB, were waived.

Although the NLRB has continued post-Epic Systems to find that mandatory employment arbitration agreements containing class and collective action waivers do not violate the NLRA, it nonetheless also continues to hold that those agreements that do not carve out the right of employees to file NLRB charges violate the protections enshrined in Section 7 of the NLRA.  Indeed, on January 24, 2020, the NLRB, using the same reasoning as the General Counsel in this memo, issued a decision finding that an employer violated the NLRA by maintaining an arbitration agreement that could be read to prohibit filing of ULP charges with the NLRB.  The key language in that agreement stated that “arbitration is the parties’ exclusive remedy for covered claims,” which includes all claims arising out of or pertaining to employment with the company.”  The takeaway from the now-outdated but still relevant Bristol Farms memo is that employers should review their arbitration agreements to confirm that the claims covered by the agreement, and therefore which must be arbitrated, do not expressly or impliedly include NLRB charges.  Indeed, a good arbitration agreement will contain language expressly exempting NLRB charges from the scope of the obligation to arbitrate.

Some blanket workplace investigation confidentiality rules are categorically lawful.    

As you know from our blog, changes in the composition of the Board from Democrat- to Republican-majority (and a Republican General Counsel) following the 2016 presidential election has led to a significant swing in the agency’s approach in enforcing the NLRA as it applies to workplace policies and rules.  The once sweeping interpretation of the NLRA given by Board Members appointed during the prior administration which prohibited a wide array of commonplace (and some would say, commonsense) employer policies has now been largely turned 180 degrees.  Perhaps the most significant example of this paradigm shift was the NLRB’s late 2017 decision in The Boeing Company, which announced a new standard to be applied to reviewing employer policies; we blogged about that decision here.  And as we recently blogged about here, in the NLRB’s August 2019 decision LA Specialty Produce, the Board further clarified that the Boeing test should be used to define certain, specific types of common workplace policies as either: 1) generally lawful under the NLRA, 2) generally unlawful under the NLRA, or 3) somewhere in between and requiring case-specific scrutiny.  In LA Specialty, the Board found two types of policies – one requiring confidentiality of vendor and customer information and the other from prohibiting employees from making, unapproved, official statements to the media on behalf of the employer – were categorically lawful under the NLRA.

In the recently-released ADC LTD NM advice memo (issued 5/7/19, after Boeing), the General Counsel addressed three employer confidentiality rules.  The memo concluded that employer policies prohibiting the disclosure of “employee personnel information,” and “any other information considered confidential by management” were unlawful under the NLRA.  The memo explained that the “personnel information” provision is unlawful because it can be read to include any employee information, such as contact information, wage data, and other information that is not confidential and often used by employees for the purpose of concerted activity, including union organizing activity.  Further, the memo stated that the provision making confidential “any other information” was too broad and uncertain to be lawful, and the employer lacked any business justification for maintaining it.

However, the memo considered the third policy, which prohibited the disclosure of information regarding employee investigations, differently.  As you know from our past posts here and here, in Banner Estrella Medical Center, the Board declared that blanket policies requiring confidentiality during workplace investigations were categorically unlawful under the NLRA.  The General Counsel urged that, in light of Boeing, the Board should overrule Banner Estrella and declare workplace investigation confidentiality policies as lawful under Boeing.  Notably, as we blogged about here, the Board considered this issue in Apogee Retail LLC and did just as the General Counsel recommended in this advice memo by expressly overruling Banner Estrella and finding that rules requiring confidentiality of investigations while an investigation is open, fall under Boeing’s category 1, while rules requiring confidentiality after the conclusion of an investigation should be analyzed further and fall into category 2.

Employers must maintain and disclose information responsive to certain union requests. 

Under Section 8(a)(5) of the NLRA, employers engage in an unfair labor practice when they “refuse to bargain collectively with the representatives of its employees” (e.g., unions).  Refusal to “bargain” can include “refus[ing] to furnish, or unreasonably delay[ing] in furnishing, information the union requests that is relevant to and reasonably necessary for the performance of its representative functions.”  In Greektown Casino, LLC (issued 12/20/19), the General Counsel concluded that the employer violated Section 8(a)(5) when it refused to produce internal surveillance video in connection with the union’s investigation into an alleged violation of an anti-discrimination provision of the parties’ collective bargaining agreement (“CBA”).  The union’s investigation was considered an attempt to “monitor and administer the CBA.”  Relying in large part on standards drawn from the Federal Rules of Civil Procedure (“FRCP,” which govern federal court litigation proceedings, including the disclosure of information between litigants), the General Counsel concluded that the employer was required to produce the video footage to the union pursuant to its request, despite the employer’s defense that it had already reviewed the video and was unable to substantiate the alleged CBA violation.  Notably, subsequent to the employer’s initial refusal to produce the footage to the union, the employer destroyed the video as a part of its routine data destruction practices.  The General Counsel advised that in addition to the employers’ initial violation by refusing to turn over the video to the union, the Board should interpret the NLRA to impose an affirmative duty on employers to preserve information that is potentially relevant to a union’s Section 8(a)(5) request for information.  Under such a precedent the employer subject to this memo would have violated Section 8(a)(5) a second time, when it destroyed the requested video footage, although current Board law does not yet reach this issue.

Employer should have pre-disclosed to union its intent to sell certain portions of its business.

In Mikesell’s Snack Food Co. (issued 3/6/17), the General Counsel determined that the employer violated Section 8(a)(5) by refusing to disclose to and bargain with a union about the employer’s  intention to sell some of its outside sales routes, and thereby, displace employees who previously worked on those routes.  Prior to its dispute with the union, the employer had determined that its outside sales business was less profitable than its manufacturing and branding components of the business, and therefore, sold several (but not all) of its sales routes to third party independent distributors, who in turn purchased product from the snack manufacturer to resell.  The memo concluded that the employer’s potential sale of these routes was a “mandatory subject of bargaining” under the NLRA, therefore, the employer violated Section 8(a)(5) by not allowing the union a chance to meet and discuss the issue with the employer before the sales were consummated.  In arriving at this conclusion, the General Counsel determined that the employer’s transfer of the sales routes to a third party was not a significant change in the nature of the employer’s business because the company had always maintained some of its own sale routes while utilizing independent distributors for others.  Thus, the sales were merely a reduction of the company’s in-house sales, not an elimination of this business unit, such as if it had sold all of its sales routes.  Further, the memo stated that the employer’s sales agreements with the independent distributors allowed the employer to bring the routes back in-house if the distributor breached its agreement or otherwise abandoned the route.  Additionally, because the employer’s motivation to sell the routes was impacted, at least in part, by the cost of labor to maintain the routes, the employer was obligated to negotiate with the union to determine whether a reduction in labor costs or other union concessions would alleviate the employer’s need to sell the routes.  The General Counsel also indicated that while the union failed to challenge past sales of the employer’s routes to independent distributors, this was not a waiver of the union’s right to challenge or bargain over future route sales.

Employer’s rule limiting employee involvement in Board of Directors election considered lawful, while rule limiting employee complaints to the BoD was not.

In Navopache Electric Cooperative (issued 4/1/16), a union challenged two employment policies pertaining to employees’ involvement with the employer’s Board of Directors, which it argued violated Section 7 of the NLRA.  The first challenged policy prohibited employees from participating in any Director’s or potential Director’s election campaign.  The General Counsel concluded this policy was not unlawful under the NLRA because “employees have no protected right to engage in activities designed solely [to] make changes in the management hierarchy.”  Among the facts that led to this outcome was the memo’s conclusion that the Board of Directors was not generally involved with day-to-day management issues of the Coop.  However, the memo found that the second policy, which prohibited employees from raising “personnel issues” to the Board of Directors at regular or special meetings of the Board, violated Section 7 because “prohibiting employees from commenting on ‘personnel matters’ before the Board [] strikes at the heart of Section 7,” specifically because it limits employees’ ability to raise issues such as “management decisions, the General Manager’s behavior, or rate of pay.”  Accordingly, the memo indicated that although the Coop’s Board of Directors is not typically responsible for decisions that impact employees’ terms and conditions of employment, the Coop’s employees should, nonetheless, have access to the Board for such purposes.

Employer violates NLRA by refusing to hire union members.

In Aerotek (issued 8/1/2012), the General Counsel concluded that the employer violated Section 8(a)(3) of the NLRA (prohibiting discrimination on the basis of union membership) when it refused to hire three union employees due to the employer’s anti-union animus.  The General Counsel’s memo stated that three other union-affiliated employees also did not receive offers of employment from the employer, however, no NLRA violations occurred with regard to those individuals because they were not “genuinely interested” in obtaining employment with the employer.

Exhaustion of union remedies lawful, but perhaps should not be.

In National Association of Government Employees, Local R14-139 (issued 8/8/19), the CBA at issue required employees who had grievances with the union to first exhaust the union’s internal administrative remedies before filing a claim in court or with the NLRB.  The memo found that under current Board precedent, this exhaustion provision is lawful.  However, the memo urged that the current precedent be overturned because it does not require that such exhaustion provisions reference Section 101(a)(4) of the Labor Management Recording and Disclosures Act, which requires a four-month limit on such exhaustion of remedies, and thus employees could read the provision at issue to require them to wait until the union’s administrative process concludes, even if that process exceeds the applicable limitations period for any legal claims, such as the six-month limitation period under Section 10(b) of the NLRA for filing a charge with the Board.  The memo opined that this unfairly prejudices employees and precedent should be revised to require notice to employees about the statutory limits on union internal remedies.

Employers cannot deduct union dues without specific, express authorization.

In Amalgamated Transit Union, Local 732 (issued 9/18/18), an employee had initially worked for one employer and authorized the deduction of union dues from her paychecks.  The employer later began to subcontract for the work performed by the employee, and as a result, she subsequently became an employee of the subcontractor.  The successor employer received a list of the employees who had previously paid union dues while employed with the predecessor-employer and automatically began deducting union dues for those employees without seeking new or confirming dues deduction authorizations.  The employee in question challenged this practice, and the  General Counsel concluded that the subcontractor could not rely on the authorization the employee provided to the prior employer and instead must obtain specific, express authorization that it could deduct union dues from her pay.  Alternatively, the memo suggested that had the dues authorization signed by the employee stated it would apply to successor employers, that would allow the subcontractor to lawfully withhold dues for its new employees.