Every so often, we focus a newsletter on the technical legal aspects of an issue as part of our Advanced Topics in HR Management series.
If you have been keeping up with employment law over the last few years, you know that the National Labor Relations Board (NLRB) has been handing down ruling after ruling encroaching on management rights to run a business and manage employees. Perhaps its best known and most written about rulings have limited the power of employers to manage employee conduct on social media sites. The purpose of this article is to explain what the NLRB is and how its most powerful tool for reaching into the non-unionized workplace functions.
The Board is a federal administrative agency that interprets and enforces the National Labor Relations Act (NLRA), also known as the Wagner Act. It was passed into law in 1935 as a key component of President Roosevelt’s “New Deal,” the brand name he gave to his strategy for responding to the Great Depression. Passage of the Act ended decades of federal opposition to unionization and collective bargaining. The NLRA created the NLRB to arbitrate entrenched labor-management disputes, to police elections for deciding whether a workforce would unionize, and penalize what it termed “unfair labor practices.”
Like the Equal Employment Opportunity Commission, the Department of Labor, and The Environmental Protection Agency, the NLRB is a federal administrative body. Like other federal agencies, it administers a federal statute by making regulations, investigating alleged violations, and adjudicating disputes. In other words, federal administrative agencies have functions similar to those found in the legislative, executive, and judicial branches of government. However, regulations are subordinate to actual statutes, administrative inspectors do not have full police powers, and rulings by administrative law judges are appealed to federal courts.
In short, administrative agencies create an additional layer of government in areas specifically designated by statute. Because administrative agencies are a layer below the three branches of government, their functions are often distinguished from full government authority by use of terms like “quasi-judicial” and “quasi-legislative”.
This “fourth branch” of the federal government is often justified by two main arguments. First, the federal courts are already clogged with litigation. Consequently, creating a dispute resolution step that must be taken prior to using the federal court system helps the courts run more efficiently. Second, and perhaps more importantly, neither Congress nor the federal courts have the technical expertise to deal with the complexities of some issues handled by agencies. Congress needs agencies to “fill in the gaps” of statutes by creating regulations based on specialized knowledge. Federal courts need agencies to use their special knowledge to fairly and correctly resolve disputes.
NLRA disputes are first heard by members of the NLRB’s division of judges. Those judges are called administrative law judges (ALJs). Proceedings before ALJs are less formal than proceedings before judges in courts of law. With relaxed procedures, administrative cases move more quickly than matters going through the court system. The NLRB is the highest quasi-judicial body for NLRA cases. It hears appeals from cases decided by ALJs. Appeals from NLRB decisions go to the federal courts. The Board is composed of five members. Each member is appointed to a five year term by the President with consent of the Senate. The terms are staggered so that only one term expires each year.
The General Counsel is independent from the Board, and acts as the investigator and the prosecutor of unfair labor practice cases. You might think of the General Counsel’s office as being similar to both the police and the district attorney.
At first glance, it may seem obvious that parties in a dispute should skip all that NLRB stuff and simply take their cases directly to court. However, federal law requires parties to exhaust their options through the appropriate administrative body before resorting to lawsuits. For example, charges of illegal discrimination in violation of Title VII work the same way: the complainant must file a charge with the Equal Employment Opportunity Commission and may not initiate a lawsuit until the Commission issues a “notice of right to sue.”
Section 7 of the Act sets forth rights of employees:
Employees shall 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, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 8(a)(3).
If you strip away the extra words, you can derive the following rule:
Employees shall have the right to engage in concerted activities for the purpose of mutual aid or protection.
For a long time, people thought of “employees” as “unionized employees,” because of the history and purpose of the Act. However, the NLRB eventually seized upon the plain language of the statute to apply it to all employees. Congress has not stepped in to modify Section 7 to limit its scope to unionized employees.
Section 8(a) of the Act defines unfair labor practices of employers. Section 8(a)(1) is arguably the most important for employers to know:
It shall be an unfair labor practice for an employer-(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7.
Thus, the NLRA protects employees’ rights to engage in concerted activity for mutual aid or protection, which is often simply called “protected concerted activity.” The natural legal questions are (1) what is “concerted activity,” and (2) what is “mutual aid or protection?” Concerted activity essentially means “two or more employees acting together.” “Mutual aid or protection” generally means “for the improvement in terms and conditions of work.”
At the end of the road, the sign reads, “The conduct of two or more employees acting together for the improvement of their pay or other terms and conditions of work is protected by federal law.” Although that protection has limits, the ramifications of the general rule are quite broad. For example, the NLRB has held:
At-will employment policies that do not make it clear that at-will employment may be modified are invalid.
Policies prohibiting discussing pay are invalid.
Complaining about a supervisor on Facebook is protected concerted activity if other employees comment. The board is likely to rule that clicking on “like” is concerted activity.
Blanket policies that prohibit employees from discussing an ongoing investigation are invalid.
As private sector unionization has dropped, public sector unionization has increased. Consequently, in order to stay relevant outside of government employment, the NLRB has become increasingly creative about interpreting the Act. Policies and practices should be updated as NLRB rulings come out. Anytime two or more employees act in concert to improve their wages or terms and conditions of work, you should consider whether the company’s response would interfere with, restrain, or coerce employees from engaging in that conduct.
To review recent cases by the NLRB, click here. The case shown at the time of this writing in Austin, Texas, involved two employees and was settled for $900,000.
Please do not hesitate to contact the Firm with any questions you may have about the effect of laws and regulations on your business or its operations.