Third Circuit Clarifies Definition of "Concerted Activity" and Test For Determining Lawfulness of Discharge Under NLRA | Practical Law

Third Circuit Clarifies Definition of "Concerted Activity" and Test For Determining Lawfulness of Discharge Under NLRA | Practical Law

In MCPC Inc. v. NLRB, the US Court of Appeals for the Third Circuit held that an employee engaged in individual concerted activity when he complained about shared working conditions, and Wright Line (not Burnup & Sims) was the appropriate legal test to determine whether the employee was discharged for that protected activity or for his alleged misconduct, irrespective of any protected activity. The court also held that the employer's policy of barring employees from disseminating confidential information was overbroad in violation of the National Labor Relations Act (NLRA).

Third Circuit Clarifies Definition of "Concerted Activity" and Test For Determining Lawfulness of Discharge Under NLRA

by Practical Law Labor & Employment
Law stated as of 23 May 2019 • USA (National/Federal)
In MCPC Inc. v. NLRB, the US Court of Appeals for the Third Circuit held that an employee engaged in individual concerted activity when he complained about shared working conditions, and Wright Line (not Burnup & Sims) was the appropriate legal test to determine whether the employee was discharged for that protected activity or for his alleged misconduct, irrespective of any protected activity. The court also held that the employer's policy of barring employees from disseminating confidential information was overbroad in violation of the National Labor Relations Act (NLRA).
On February 12, 2016, in MCPC Inc. v. NLRB, the US Court of Appeals for the Third Circuit held that
  • An employee engaged in individual concerted activity when he complained about shared working conditions.
  • Wright Line (not Burnup & Sims) was the appropriate legal test to determine whether the employee was discharged for that protected activity or for his alleged misconduct, irrespective of any protected activity.
  • The employer's policy of barring employees from disseminating confidential information was overbroad in violation of the NLRA.
    ( (3d Cir. Feb. 12, 2016).)

Background

Technology company MCPc discharged Jason Galanter, a senior solutions architect, after he complained, during a February 2011 team building lunch, about engineer shortage (resulting in heavy workloads) and executive compensation. After the lunch, Mike Trebilcock, MCPc's CEO, became concerned about a possible breach of confidential files. Galanter was summoned to meet with Trebilcock. Galanter provided several different conflicting explanations about where he had heard the executive salary information about which he had complained. Consequently, Trebilcock:
  • Concluded that Galanter was lying.
  • Accused Galanter of disclosing confidential executive compensation.
  • Terminated Galanter.
In December 2011, the NLRB's General Counsel issued a complaint alleging that MCPc had violated Section 8(a)(1) of the NLRA by:
  • Discharging Galanter for complaining about working conditions (which the General Counsel described as protected concerted activity under Section 7 of the NLRA).
  • Maintaining an overbroad confidentiality policy.
The ALJ:
  • Applied the test established in NLRB v. Burnup & Sims, Inc., that Section (8)(a) "is violated if an employee is discharged for misconduct arising out of a protected activity, despite the employer's good faith, when it is shown that the misconduct never occurred" (see 379 U.S. 21 (1964) and MCPc, Inc., 360 N.L.R.B. No. 39, , at *16 (Feb. 6, 2014)).
  • Found that Galanter did not, in fact, access MCPc's confidential files, and therefore concluded that Galanter's discharge constituted an unfair labor practice (ULP).
In a February 2014 decision, the Board affirmed the ALJ's holding that MCPc had discharged Galanter for his protected concerted activity in violation of Section 8(a)(1), holding that:
  • MCPc's policy barring discussion of confidential information:
    • was overbroad in violation of the NLRA; and
    • could not constitute a valid ground for termination.
  • Burnup & Sims was inapplicable because Galanter:
    • had allegedly accessed confidential company files before, rather than in the course of, his protected activity; and
    • therefore, was not terminated for committing misconduct "arising out of" protected activity.
  • Even assuming Burnup & Sims applied, and that MCPc discharged Galanter because it believed he had accessed confidential files, MCPc had violated the NLRA because Galanter had not committed this misconduct.
MCPc petitioned for review with the Third Circuit. The Board cross-applied for enforcement.

Outcome

The Third Circuit vacated and remanded, holding that:
  • Galanter engaged in "concerted activity" when he communicated his dissatisfaction about shared working conditions during the team building lunch.
  • The Board failed to apply the correct legal test in determining whether Galanter was discharged for that protected activity or whether he was discharged for his alleged misconduct, irrespective of any protected activity.
  • Wright Line was the appropriate test for assessing Galanter's ULP claim.
  • MCPc's policy of barring employees from disseminating confidential information was overbroad in violation of the NLRA.
The Third Circuit first considered the threshold question of whether Galanter's individual conduct was "concerted," finding that:
  • In Meyers Industries, Inc. (Meyers II), the Board established that it recognized individual conduct as "concerted" both where:
    • "individual employees seek to initiate or to induce or to prepare for group action;" and
    • where "individual employees bring truly group complaints to the attention of management."
    (281 NLRB 882, 887 (1986).)
  • Third Circuit precedent includes two key cases:
    • In Mushroom Transportation Co. v. NLRB, it held that the employee engaged in "mere griping" and not concerted activity when he privately dispensed advice to employees "without involving fellow workers or union representation to protect or improve his own status or working position" (330 F.2d 683, 685 (3d Cir.1964)); and
    • In Frank Briscoe, Inc. v. NLRB, it held that an individual employee engages in concerted activity when he complains to management where the action was taken with the apparent sanction of coworkers (637 F.2d 946, 949 (3d Cir.1981)).
  • Galanter's conduct does not fit neatly into either Mushroom Transportation or Frank Briscoe because he complained to management to improve his working position without the sanction of other employees but also to induce group action in the interest of those employees.
  • In Worldmark by Wyndham, an individual employee who complained to management in an unplanned group context and successfully attracted the impromptu support of at least one fellow employee was held to have engaged in concerted activity (356 NLRB No. 104, (Mar. 2, 2011)).
  • According to this established precedent, Galanter engaged in concerted activity because, although the team building lunch was not organized for the express purpose of discussing company policy, it did provide a group forum within which Galantar could relay to management complaints shared by other employees about conditions they wished to see improved (see MCPc, Inc. 360 NLRB No. 39; Worldmark by Wyndham, 356 NLRB No. 104). Further, two other employees agreed when Galanter argued that MCPc should hire more engineers and had the financial ability to do so.
The Third Circuit next considered whether substantial evidence supported the Board's conclusion that Galanter's protected statements at the team building lunch formed the basis for his discharge, finding that:
  • MCPc's policy of barring employees from disseminating confidential information was overbroad. To defend a discharge based on a rule that even "has the tendency to inhibit [protected] activity," an employer must show "legitimate and substantial business justifications" for the rule (Jeanette Corp. v. NLRB, 532 F.2d 916, 918 (3d Cir.1976) (quoting NLRB v. Fleetwood Trailer Co., 389 U.S. 375 (1967))). MCPc failed to make this showing, as rational employees could interpret its policy to prohibit certain protected activities, including wage discussions.
  • The ALJ and Board applied the wrong legal test in determining whether Galanter was discharged for improperly obtaining confidential salary information.
  • The "mixed motive" or "dual motive" discharge test established in Wright Line is appropriate where an employer argues that it discharged an employee for reasons unrelated to his protected activity (251 N.L.R.B. 1083 (1980)).
  • Under Wright Line, if the General Counsel makes a prima facie showing that protected conduct was a motivating factor in the employer's decision, the burden shifts to the employer to demonstrate that it would have taken the same action even in the absence of the protected conduct (see NLRB v. Alan Motor Lines Inc., 937 F.2d 887, 889 (3d Cir.1991) (quoting Wright Line, 251 N.L.R.B. 1083, at 20–21); D & D Distrib. Co. v. NLRB, 801 F.2d 636, 642 (3d Cir.1986) (citing Transp. Mgmt. Corp., 462 U.S. 393, at 401–02 (1983))).
  • Burnup & Sims applies exclusively when the misconduct occurs during protected activities. Therefore, because Galanter's misconduct did not take place during his protected discussion with management, Burnup & Sims is not the correct test for analyzing his alleged improper access to confidential company salary information.
  • The ALJ and Board's determination that Galanter was terminated for his protected statements at the team building lunch does not appear to take into account significant contrary evidence on the record indicating that MCPc would have discharged Galanter regardless of his statements because it suspected he was being dishonest.
  • Past precedent suggests it would be appropriate to remand for the Board to apply the correct legal test (Wright Line), taking into account evidence of MCPc's expectations regarding employee integrity and honesty and its past practices in imposing discipline for misconduct or dishonesty of the kind alleged in this case.

Practical Implications

Employers must be aware of what constitutes "protected" and "concerted" activity and be sure that any discipline imposed on an employee who engaged in protected concerted activity is for reasons unrelated to that activity. Employers should be consistent when imposing discipline on employees who engage in similar dishonesty during an investigation (or other misconduct similar to the employee who engage in concerted protected activity), which will help show that the employer would have taken the same action regardless of an employee's protected activity. Employer should also review their confidentiality policies to ensure they are not overbroad and that they do not infringe on employees' rights under the NLRA.
Update: On May 23, 2019, on remand from the Third Circuit, the Board considered the lawfulness of Galanter's discharge under Wright Line and reaffirmed that MCPC, Inc. violated Section 8(a)(1) by discharging Galanter for his protected concerted activity during the team-building lunch (MCPC, Inc., 367 N.L.R.B. No. 137 (May 23, 2019)).