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NLRB Clarifies Special Circumstances Test for Banning Union Apparel and Insignia
Practical Law Legal Update w-003-3686 (Approx. 8 pages)
NLRB Clarifies Special Circumstances Test for Banning Union Apparel and Insignia
by Practical Law Labor & Employment
| Law stated as of 13 Sep 2016 • USA (National/Federal) |
In Medco Health Solutions of Las Vegas, Inc., the National Labor Relations Board (NLRB) clarified its "special circumstances" test for employer bans on union apparel and insignia, noting that an employer's interests must be balanced with an employees' Section 7 rights.
On August 27, 2016, in Medco Health Solutions of Las Vegas, Inc., the majority of the panel (Board) heading the NLRB's judicial functions clarified its "special circumstances" test for banning union apparel and insignia, holding that the employer has the burden to prove the existence of "special circumstances" that justify a ban of the message and that the Board requires more proof from an employer seeking to restrain employee speech concerning working conditions than from an employer seeking to restrain employee speech concerning employer products. The Board held that an employer failed to establish special circumstances justified its banning a shirt that criticized the company's employee performance incentive program. In addition, the Board found that the employer's dress code that prohibited clothing with statements that were confrontational, insulting, or provocative was unlawful. (364 N.L.R.B. No. 115 (Aug. 27, 2016).)
Background
Medco operated a large automated pharmacy and call center in Las Vegas. The union represented two bargaining units in Medco's Las Vegas facility, one comprised of pharmacists and the other, nonpharmacists. Most of the prescriptions were completed by phone and mail, and employees had little in-person contact with consumers. To encourage employee performance, Medco instituted the voluntary "WOW program," which recognized employee achievement. Some employees voiced displeasure with the program, including nonpharmacist employee, Michael Shore, who wore a shirt to work that read "I don't need a WOW to do my job." While Shore had little consumer contact, tour groups sometimes entered his work area and the employee cafeteria. On the day Shore wore the shirt, coworkers in the cafeteria saw it, and customers were touring the facility.
Shore's supervisor demanded that he remove the T-shirt because it was "insulting" to Medco, and told Shore that if he disagreed, "there were plenty of jobs out there." Shore complied with the request. The union filed an unfair labor practice (ULP) charge, alleging that Medco's action regarding Shore violated his rights under Section 8(a)(1) of the NLRA and that Medco unlawfully failed to bargain about the dress code. Medco invoked its dress code, which it claimed lawfully banned, "Phrases, Words, Statements, pictures, cartoons or drawings that are degrading, confrontational, slanderous, insulting or provocative."
The Board ordered Medco to cease enforcing the dress code and to rescind the ban on "provocative, insulting, or confrontational" statements. The Board also found that Medco unlawfully failed to bargain with the union before implementing its changes to the dress code. For more on the Board proceedings before the US Court of Appeals for the District of Columbia Circuit decision, see Legal Update, Employer Did Not Violate NLRA by Prohibiting Clothing with Insulting Message: DC Circuit.
The DC Circuit held that Medco did not violate the NLRA by requiring Shore to remove the shirt that mocked the WOW program. The court reversed the Board's ruling, and held that:
- Medco's response was justified because the shirt could affect the employer's relationship with its customers.
- The NLRA allowed Medco to ban confrontational and provocative messages on employees' clothing because the ban was not imposed in response to union activity and would not be construed by a reasonable employee as prohibiting NLRA-protected conduct.
However, the court also held that Medco violated the NLRA by refusing to bargain with the employees' union regarding changes to its dress code. The DC Circuit directed the Board, on remand, to:
- Explain its rejection of Medco's argument that it was justified in banning Shore's shirt throughout the entire workday.
- Clarify the issue of a partial ban, asking why Medco's claim of customer relations harm required evidence beyond a relationship between its business and the banned message.
- Explain its implicit ruling that the dress code terms "confrontational," "provocative," and "insulting," were overly broad.
Outcome
The Board majority (Members Hirozawa and McFerran) reaffirmed its prior findings and held that Medco engaged in ULPs in violation of Section 8(a)(1) of the NLRA by:
- Prohibiting employees from wearing clothes displaying messages that protest working conditions.
- Telling employees who protest working conditions that they could quit.
- Maintaining overly broad work rules prohibiting employees from wearing clothing with provocative, insulting, or confrontational messages.
The majority noted that:
- The Board's rule for determining whether an employer can justify a ban on clothing that makes reference to a union or working conditions was summarized in AT&T:
"Employees generally have a protected right under Section 7 to wear union insignia, including union buttons, in the workplace. . . . This right, however, may give way when the employer demonstrates special circumstances sufficient to outweigh employees' Section 7 interests and legitimize the regulation of such insignia. . . . Special circumstances may include, inter alia, "situations where display of union insignia might 'jeopardize employee safety, damage machinery or products, exacerbate employee dissension, or unreasonably interfere with a public image that the employer has established, as part of its business plan, through appearance rules for its employees.'"
- The respondent has the burden of proving that special circumstances justify a restriction (such as showing that the shirt's message interferes with the employer's image). The exception is very narrow. (Starwood Hotels and Resorts Worldwide, Inc., 348 N.L.R.B. 372, 373 (2006); Eckerd's Market, Inc., 183 N.L.R.B. 337, 338 (1970).)
- To rely on a preservation of a public image as a special circumstance, an employer must show that:
- it has established a public image as part of its business plan;
- it has maintained appearance rules for employees (such as requiring employees to wear uniforms in public) to meet that public image business objective; and
- the banned button, insignia or message clothing interferes with that public image business objective.
- The Board has upheld bans on message buttons, insignia, and clothing that disparage the employer's products and services based on the employer's legitimate interest in protecting its customer relationships:
- where the message or slogan reasonably created concern among customers; and
- without the employer presenting any evidence that customers decided not to buy the product in response to the banned slogan.
- Where the message on buttons, insignia, or clothing relates to employment terms and conditions rather than employer products or services, the Board has required an employer seeking to rely on the customer relations special circumstance to:
- offer more than conjecture about customers' negative reactions to employees' Section 7 activity. The Board demands specific evidence, not necessarily of an actual harm or disturbance, rather than general speculative or conclusory testimony; and
- show that the employee's wearing of the message adversely affects the business to the level that the ban outweighs the employee's Section 7 right to display the message. Generalized speculation about potential disruption is insufficient.
- Further, where the message on buttons, insignia, or clothing relates to employment terms and conditions rather than employer products or services, the Board has held that none of the following evidence outweighs employees' Section 7 rights to wear the message:
- the possibility that the employer's employees may come in contact with a customer or supplier (Escanaba Paper Co., 314 N.L.R.B. 732, 733 fns. 5 and 7 (1994));
- the employer's interest in avoiding controversy among its clientele that an expression of union membership or support might engender; or
- the pleasure or displeasure of an employer's customers.
- Employers have a legitimate interest in preventing disparagement of their products, but have no such legitimate interest in preventing employee discussion of terms and conditions of employment (Three D, LLC (Triple Play Sports Bar), 361 N.L.R.B. No. 31, slip op. at 4 (Aug. 22, 2014)).
- The Board considers how much employees interact with the public when evaluating the validity of a total ban on message buttons, insignia, or clothing and does not uphold such bans when employees have minimal or no contact with the public (USF Red Star, Inc., 339 N.L.R.B. 389, 391 (1993); Starwood Hotels and Resorts Worldwide, Inc., 348 N.L.R.B. at 372).
- Under Lutheran Heritage Village-Livonia, a work rule is unlawful if it restricts activities protected by Section 7 of the NLRA (343 N.L.R.B. 646 (2003).
The majority ruled that:
- In light of the different interests involved when employee or union messages disparage company products versus employment practices, it is reasonable for the Board:
- to treat these two types of cases differently; and
- require higher proof from an employer looking to limit employee speech regarding work conditions.
- Medco failed to establish "special circumstances" justifying the ban of Shore's shirt, since it did not show that:
- the shirt would unreasonably interfere with a public image established by Medco through employee appearance rules;
- the shirt adversely affected Medco's business relationships; or
- the ban outweighed Shore's right to wear the shirt containing the protected message.
- Medco unlawfully applied the terms, "confrontational," "provocative," and "insulting" from its dress code to restrict the exercise of Section 7 rights.
- Medco failed to:
- show that Shore had more than minimal client contact or that any customers complained about employees' attitude towards the WOW program; or
- demonstrate that the shirt must be banned completely, as opposed to only when there was a chance touring visitors might witness the shirt's message.
- Even if special circumstances did exist, Medco failed to establish that employees lacked advance notice of tours or that a partial ban would be impractical.
In dissent, Member Miscimarra asserted, among other things, that:
- The Board cannot properly impose a heavier burden on employers looking to set up reasonable restrictions on workplace attire for important business reasons.
- Medco's dress code stated that it was created with customer perceptions in mind to encourage businesses to work with it. Therefore, the majority erred in finding that Medco did not show that it had implemented appearance rules to attract customers.
- The majority erred in finding that Medco failed to establish that the shirt threatened harm to customers relationships. According to Board precedent, to find special circumstances, an employer's burden is only to show "substantial evidence" of the insignia or message's effect on the business, and that the ban outweighs the right to wear it. (Inland Counties Legal Servs., 317 N.L.R.B. 941 (1995)).
- The majority erred in holding that harm to customer relations cannot be established from the content of a message that concerns terms and conditions of employment (see Leiser Constr., LLC, 349 N.L.R.B. 413 (2007); Komatsu America Corp., 342 N.L.R.B. 649 (2004)).
- The majority contradicted the DC Circuit by offhandedly dismissing Medco's considerable evidence that the WOW program is an important part of the pitch to clients.
- A total ban is not unlawful because Shore had substantial contact with customers.
- The complaint allegation that Medco unlawfully applied its dress code to prohibit Shore's shirt should have been dismissed. Miscimarra agreed with the DC Circuit that there was no valid explanation for why the dress code's language was overly broad or violative.
- Lutheran Heritage should be overruled for the reasons he stated in his dissent from William Beaumont Hospital (363 N.L.R.B. No. 162, slip op. at 7–31 (Apr. 13, 2016)).
- Employers have a legitimate interest in promoting a civil and decent workplace. The Board must strike a balance between legitimate justifications and adverse impact on NLRA-protected activity.
- Medco's dress code lawfully prohibited "insulting," "confrontational," or "provocative" clothing. Impact of the dress code on Section 7 was slight.
Practical Implications
The DC Circuit tasked the Board on remand to make consistent its holdings about public image or customer relationship special circumstances for banning message clothing, buttons, or insignia (or alternatively to justify the inconsistency). The Board majority attempted the latter approach:
- Cementing a double standard for bans of employee messages arguably harming customary relationships based on whether the message is about:
- the company's product on its face; or
- about employment terms and conditions.
- Parsing its public image special circumstances precedent for language supporting the very narrow construction it applied in this case.
In any event, the Board did clarify that it will rely on cases supporting the narrowest public image and customer relations special circumstances from its muddled precedent.
The Board also noted without citations that the employer's public image argument failed in part because the employer did not:
- Expressly reference the name of its WOW performance incentive program in its dress code.
- Show that it implemented its appearance rules to protect the particular WOW performance incentive program.
- Require WOW award recipients to display their lanyards and certificates on days customers toured the facility, implying that the employer must positively require employees to promote the particular incentive being besmirched by the employee messaging if it wants to lawfully preclude such messaging.
Employers should expect the Board to cite these new granular factors in future public image cases.