NLRB Finds Employees’ Facebook Postings Were Protected Concerted Activity and Their Discharge a Violation of the NLRA
In yet another case involving Facebook postings, the NLRB has concluded that employees who were fired for their work-related exchanges, including on Facebook, were engaged in protected concerted activity under the NLRA.
Facts of the Case: In Design Technology Group, three employees at a high end clothing store in San Francisco asked the store manager if the closing time for the store could be one hour earlier when the tourist season ended. They noted that all other stores in the area closed earlier, so that when Design Technology employees left the store, the streets were deserted and the employees were fearful. The manager said she would see if the owner would permit this, but nothing changed. When the store manager was out of town, one of the three employees called the owner to report on the sales for the day and in the course of doing so, mentioned the employees’ request that the store close earlier and the reasons. The owner said that he had not been aware of the request and authorized the employee to close the store earlier. After closing early that night, the employee received a call on her cell phone from the store manager demanding to know why the store phone was not being answered. The employee relayed her conversation with the owner which resulted in the store closing early, to which the store manager replied “I don’t believe you.” After speaking with the owner, the store manager called the employee, told her that the store would not close early again, and that she was in disbelief that the employee had raised the issue with the owner. The employee and her coworkers then posted messages on Facebook about the store manager’s immaturity, how the founder of the store would “roll over in her grave” at how employees were treated, and how one of them, whose mother worked for a law firm, intended to bring in a book entitled “California Workers Rights” (which she did the next day). The Facebook postings were shared with the store manager, who provided them to a human resources person, who in turn shared them with the owner with an email message noting the mention of the law booklet and stating that they needed to “take action right away.”
The employees were told that they were “not working out” and fired. Afterwards, one of the employees wrote of her termination on her Facebook page: “Muhahahahaha!! So they’ve fallen into my clutches.” The employer saw this posting and concluded that the employees had provoked the company into terminating them. An administrative law judge concluded that the employees were terminated for engaging in protected concerted activity and rejected the company’s argument that they should not prevail because they engaged in a “set up” to be terminated.
The NLRB’s Decision. The Board affirmed the ALJ’s decision. The Board found that the employee who spoke to the owner was engaged in protected concerted activity when she presented him with the employees’ concerns about working late in an unsafe neighborhood. The continuation of the discussion amongst employees on Facebook was a continuation of that protected activity. However, the Board stated that “the Facebook postings would have constituted protected concerted activity in and of themselves. The Facebook postings were complaints among employees about the conduct of their supervisor as it related to their terms and conditions of employment and about management’s refusal to address the employees concerns. The employees also discussed a book about the rights of workers in California so that they could determine whether [their employer] was violating labor laws. Such conversations for mutual aid and protection are classic protected concerted activity.” The Board also rejected the employer’s argument that it had been “set up.” The Board stated that even if there was credible evidence of a set up (which the Board rejected), the employees’ communications about their workplace issues was protected activity; the motives of a participant in such activity are irrelevant.
Lessons Learned. This case is a reminder that employees who complain about workplace treatment, including on social media, may be protected under the NLRA, even when they use rough or disrespectful language about members of management and coworkers. Employers must think carefully about how to address the matter. Terminating the participants for insubordination or for disparagement of the company in a public forum is risky business. The best approach is to get advice from experienced labor counsel before deciding what action to take, if any.
Court Finds NLRB Acted Arbitrarily and Without Substantial Evidence In Finding That Company Failed to Bargain in Good Faith
In a recent case, the U.S. Court of Appeals for the Second Circuit held that the NLRB acted arbitrarily and without substantial evidence when it decided that a company had failed to bargain in good faith by refusing to provide the union with a copy of a 19 page financial statement, as opposed to providing the union with the opportunity to review the financial statement and take notes. The Court also refused to enforce the Board’s order that the employer reinstate the employees who went on strike after the employer unilaterally implemented the terms of its last offer and then offered to return under the old contract.
Facts of the Case: In SDBC Holdings, Inc., f/k/a Stella D’oro Biscuit Co, Inc., v NLRB, a private equity firm (Brynwood Partners) acquired Stella D’oro baking company, which was losing money. Brynwood’s business model involves purchasing distressed companies, improving their financial performance, and then selling them at a profit within 5 to 10 years. Stella D’oro’s employees were represented by a union. After acquiring Stella D’oro, Brynwood invested $3.1 million in new equipment and implemented changes in products, pricing and management staffing.
At the start of negotiations for a new collective bargaining agreement (CBA), the lead negotiator for Brynwood/Stella D’oro provided information on Stella D’oro’s financial performance and expenses (including a $1.6 million dollar operating loss). They advised the union negotiators that labor costs for low skilled workers were out of line with the market, that Brynwood was not in business to sustain losses, and that they would have to negotiate changes to wages and benefits. The union responded that they would need financial documents to substantiate the claims. During the ensuing three months of negotiations, management’s representatives provided the union with multiple opportunities to review Stella D’oro’s 19 page financial statements and take notes, including at a lawyer’s office at a time of their choosing. The union wanted, instead, to have a copy of the statement and offered to sign a confidentiality agreement. Management declined, citing the difficulty of enforcing confidentiality and concern about the information getting into the hands of competitors and other third parties. The union did not avail itself of the opportunity to review the financial statement.
After the company and the union were unable to agree on terms for the CBA, management made a final offer, which the union rejected. Brynwood/Stella D’Oro implemented the terms of the last offer and the union called a strike. The union filed an unfair labor practice charge, claiming that the company failed to bargain in good faith by refusing to furnish a copy the financial statement. Subsequently, the union members offered to return to work under the old contract. Stella D’Oro declined to reinstate because those terms had been changed. The NLRB ruled that Stella D’oro had failed to bargain in good faith by refusing to provide the financial statement to the union. Because this refusal made the strike one over an unfair labor practice, the NLRB further ruled that the strikers had been entitled to reinstatement based on their offer to return to work. The Board ordered Stella D’oro to reinstate the strikers with backpay. The employer appealed.
The Court’s Ruling: The U.S. Court of Appeals for the Second Circuit refused to enforce the Board’s order. Under established law, an employer that asserts an inability to meet a union’s financial demands is required to provide financial documents to support its position during bargaining if the union demands them. An employer that states merely its unwillingness to meet union demands is not so obligated. The court ruled that the evidence was clear that Brynwood, the private equity firm, had invested over $3 million in Stella D’Oro but had made clear that it was not in business to lose money indefinitely. This showed unwillingness to pay, not an inability. Statements that the Board relied on to find an implied inability to pay – that Brynwood “might have to close the business” and that Stella D’oro was a “bleeding, distressed asset”—were taken out of context by the Board. While the negotiators “unsurprisingly stressed Stella D’oro’s financial difficulties, they repeatedly characterized their bargaining position in terms of what Brynwood was willing to do with its investment, not what Stella D’oro itself could or could not afford.” The court also found that the NLRB had misapplied Second Circuit precedent in holding that the 19 page financial statement of Stella D’oro was relevant to bargaining given that the private equity firm, Brynwood, was funding the operation. That said, the access that the union was given to the relatively short financial statement gave it a full opportunity to obtain the information, contrary to the Board’s conclusion that it was too complex to review in that fashion.
Given that the company did not commit an unfair labor practice during negotiations, the court concluded that it reached a lawful impasse such that its unilateral implementation of its last offer was not, as the Board found, a separate unfair labor practice. As a consequence, the company’s refusal to reinstate the strikers was not an unfair labor practice. While a striker who unconditionally offers to return to work must be reinstated if his job is open, the union offered to return under the terms of the prior CBA, a conditional offer, and those terms had lawfully been replaced by the terms of the employer’s last offer.
Lessons Learned: Employers can take comfort in knowing that NLRB overreach is subject to judicial correction. The employer was acting in good faith by balancing its need to safeguard its confidential financial information against the union’s need for access to it. The union did not take advantage of the access provided for tactical reasons and the NLRB endorsed this bad behavior. Of course, the cost of obtaining judicial review is significant, which means that NLRB overreach does not get addressed in many cases.
Maryland General Assembly Employment Legislation Update
In the Maryland General Assembly session that ended in April 2012, Shawe & Rosenthal lawyers worked with the Maryland Chamber of Commerce to defeat most of the burdensome employment legislation, including mandatory paid sick leave and increases in the minimum wage that eventually would have included automatic increases for inflation. Three employment bills were passed and are expected to be signed by the Governor. If they become law, they will go into effect on October 1, 2013.
Accommodations for Pregnancy-Related Disabilities: Maryland’s Civil Rights Act was amended by HB804/SB784 to require employers with 15 or more employees to provide reasonable accommodations for pregnancy-related disabilities absent undue hardship. Under the legislation, once a pregnant employee requests an accommodation, the employer is required to explore with the employee “all possible means of providing reasonable accommodations” which are specified to include the following:
Changing the employee’s job duties;
Changing the employee’s work hours;
Relocating the employee’s work area;
Providing mechanical or electrical aids;
Transferring the employee to a less strenuous position; or
A job transfer to a “less strenuous or less hazardous position” also may be required if the employer has a policy, practice, or collective bargaining agreement that provides such transfers in the case of other temporary disabilities or the employee’s healthcare provider advises that the employee should be transferred and the employer can provide the transfer without (1) adding a new job that would not otherwise be added; (2) discharging another employee; (3) transferring a more senior employee; or (4) promoting an employee who is not qualified to perform the job.
Employers can require employees to provide medical certifications to support the requested accommodation to the same extent that employees with other temporary disabilities are required to provide such documentation. The legislation states that the certification should state the date on which the accommodation became medically advisable, the probable duration of the accommodation, and an explanation as to the medical advisability of the accommodation.
Information about the law must be included in any employee handbook and posted in a conspicuous place along with other legally required notices. Employees may bring suit under the Maryland Civil Rights against employers for alleged violations of the law.
This law, which is expected to be signed by the Governor, will require employers to do more than treat pregnancy like other temporary disabilities, which is the limited mandate provided under the federal Pregnancy Discrimination Act. Rather, employers will have to affirmatively provide accommodations to pregnant employees that are “medically advisable” unless providing them poses an undue hardship on the business. In addition, the job transfer obligation would appear to apply to any open position for which the employee is qualified (including possibly a higher level job).
Lien for Unpaid Wages: SB 758 establishes a mechanism for an employee or the Commissioner of Labor to obtain a lien on personal or real property of an employer in order to secure an amount of unpaid wages (including penalties) alleged to be due. The process would be initiated by using valid legal process to serve the employer (which term is defined to include a person who acts directly or indirectly with the employee in the interest of the employer) with a notice specifying the wages claimed to be due and property against which the lien is sought. The burden would then be on the employer to file a complaint in the circuit court in the county where the property is located to oppose the lien. An evidentiary hearing could be requested by either party. The party seeking the lien would have to prove that the wages were due. The prevailing party could obtain attorneys’ fees and costs.
This legislation is modeled on the Maryland Contract Lien Act, which provides an expedited process for a party to obtain a lien in the event of a contract breach. The difference, however, is that the Contract Lien Act applies only if the parties have identified by contract a piece of property that would be subject to a lien in the event of a breach. This legislation, if signed by the Governor, will permit an employee or the Labor Commissioner to seek a lien on any property of the employer (or a person acting directly or indirectly on behalf of the employer), with or without a valid judgment (assuming that they can prove the wages are due).
Civil Rights Tax Relief Act: Non-economic damages for personal physical injuries are not treated as income for purposes of federal or State taxes. Non-economic damages for non-physical injuries (such as emotional distress, pain, suffering and the like) are treated as income. The General Assembly passed legislation (HB 1169/SB639) that will permit such damages (whether received by judgment or in settlement) to be exempted from Maryland taxes. Employers still will report payments to claimants, including by settlement, on a Form 1099 and it will be up to the employee/claimant to seek the adjustment on his/her taxes.
NLRA – Confidentiality Rules. Most employers have rules requiring employees to maintain confidentiality concerning certain subjects, including communications that take place when employees participate in internal company investigations. The NLRB had been striking down many employer confidentiality rules when they dealt with wages and employment conditions, but went a step further last year in concluding that a blanket rule that prohibits employees from discussing an ongoing investigation was illegal. The NLRB Division of Advice recently issued an Advice Memorandum that addressed this issue and suggests how a lawful rule may be worded. As we explained in our August 2012 Eupdate the NLRB, in Banner Health, found a blanket rule prohibiting employees from discussing an ongoing investigation unlawfully interfered with the employees’ Section 7 right to communicate about terms and conditions of employment for mutual aid and protection. The Board stated that to justify a prohibition on employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights. The Board provided some factors to consider in deciding whether a confidentiality obligation violated Section 7, but, otherwise, was unclear as to what rule would be unlawful. In an Advice Memorandum dated January 2013 but just recently released, the Division of Advice found a confidentiality rule to be unlawful but then took the rather extraordinary step of providing a rewrite of the rule to indicate what would be lawful:
[The Company] has a compelling interest in protecting the integrity of its investigations. In every investigation, [the Company] has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. [The Company] may decide in some circumstances that in order to achieve these objectives, [employees] must maintain the investigation and [the employees’] role in it in strict confidence. If [the Company] reasonably imposes such a requirement and [employees] do not maintain such confidentiality, [employees] may be subject to disciplinary action up to and including immediate termination.
Although pronouncements in Advice Memoranda are not binding precedent, they represent the considered opinion of the NLRB Office of General Counsel. As such, employers should consider this formulation to be a model for employee confidentiality requirements in policies that govern internal investigations.
OSHA – Union Access. OSHA recently released an interpretation letter answering questions posed by a union official in which OSHA stated that employees in a nonunion workplace may designate a person affiliated with a union to act as the employees’ representative in connection with an OSHA investigation and enforcement action. The OSH Act and its interpretive regulations recognize that an “employee representative” may have a role in an OSHA investigation. Although acknowledging that the OSH regulations assume “that most employee representatives will be employees of the employer being inspected” (e.g. shop stewards or the employees’ collective bargaining representative) the letter, concluded that non-employee representatives (e.g. unions or community organizations) could be designated by nonunion employees for purposes of filing complaints on their behalf, requesting workplace inspections, and participating in information conferences to discuss issues raised by an OSHA citation. The letter further stated that such representatives also would be entitled to accompany the inspector and an employee during a workplace inspection so long as the OSH inspector determined that the representative is “reasonably necessary” to an effective inspection. Representatives are “reasonably necessary,” according to the letter, when they will make a positive contribution to a thorough and effective investigation. Agreeing with points made by the union official who sought the opinion letter, the letter states,
As you point out, there are numerous ways an employee representative who is neither an employee of the employer being inspected or a collective bargaining agent could make an important contribution to a thorough and effective inspection. This could be because of the representative’s experience and skill, for example because of experience evaluating similar working conditions in different plants. There also may be instances where non-English speaking workers want a representative who is fluent in both their own language and English, something that would facilitate more useful interactions with the [OSHA inspector] during the inspection. Finally, workers in some situations may feel uncomfortable talking to an OSHA [inspector] without the trusted presence of a representative of their choosing.
Filing health and safety complaints with OSHA has long been a tool of a union “corporate campaign” when an employer has been targeted for organization. By giving unions access to nonunion workplaces and a recognized status as the “employee representative” for purposes of OSH investigations and enforcement actions, OSHA has awarded unions a powerful new organizing tool.
I-9 Form. The USICS has issued a new Form I-9, which must be used by all employers as of May 7, 2013. The new Form I-9 has an effective date of March 8, 2013. Although the old form may be used for an interim period, the new form must be used exclusively as of May 7, 2013. The form has been designed to be easier to understand and includes more detailed instructions for employers, as well as more detailed employee information. Employers should not complete a new I-9 for existing employees. Rather, the form should be used for new hires and for required reverifications of employment eligibility status. The circumstances that require reverification – including the expiration of a previously provided work authorization document – are explained on the USICS website. As USISC said in its Federal Register Notice concerning the new Form I-9, unnecessary verification of employment eligibility may violate immigration law.
Arbitration. The U.S. District Court for the District of Maryland held that an arbitration agreement that required an employee, but not the employer, to arbitrate any claim was not enforceable. In Raglani v. Ripken Professional Baseball, d/b/a Aberdeen Ironbirds, the defendant moved to dismiss a former employee’s complaint of sex discrimination and compel her to submit her claims to arbitration pursuant to the agreement that she had signed at hire requiring her to arbitrate any claim against the employer. The employee argued that the agreement was not enforceable. The court agreed for three reasons. First, the court found that the agreement was not supported by adequate consideration. Under Maryland law, an arbitration agreement must by its terms contain adequate consideration; continued employment is not adequate consideration to support an agreement to arbitrate. Instead, there must be a mutual agreement to arbitrate, which was lacking. Second, the agreement did not provide a neutral forum for the employee to resolve disputes. Although the agreement stated that disputes would be resolved by “an impartial external third party” based on a list of “qualified arbitrators,” the employer had exclusive control over the list of arbitrators. Under controlling court precedent, “simply promising to provide a list of arbitrators, without providing a mechanism by which the selection of an impartial arbitrator will actually be ensured, is insufficient.” Finally, the agreement was defective because it failed to identify rules by which any arbitration would be governed, merely stating that arbitration would be under the FAA (Federal Arbitration Act), rather than, for example, selecting the rules of the AAA (American Arbitration Association). This case makes clear that arbitration agreements will not be enforced unless they are based upon mutual promises to arbitrate and set forth a clear and fair process for the resolution of disputes.
FMLA. An employee who was terminated after an absence put her over the number of attendance points for termination could not claim a violation of FMLA where her notice to her employer supported a medical absence of only one day. In Brushwood v. Wachovia Bank, N.A., the employer had a point system where non-FMLA absences and tardiness were counted against employees. Those who reached a certain number of points were terminated. The plaintiff took FMLA leave twice for depression without any adverse consequences. She also incurred more points than company policy permitted and was warned rather than terminated. After the plaintiff cut her foot on a Sunday and advised her supervisor that the emergency room doctor gave her a medical excuse for a one-day absence, her supervisor suggested that she see if her personal doctor would put her out for longer so that her absence would be excused under FMLA. The plaintiff’s personal doctor refused, and the plaintiff was informed of her termination that Monday. The following Friday she came to work, still on crutches, to sign the termination papers. After her termination, she had her first doctor’s visit. The doctor noted that her wound was still swollen.
The Plaintiff challenged her termination under the FMLA and lost on summary judgment. In affirming, the U.S. Court of Appeals for the Fourth Circuit observed that the plaintiff advised her employer that she was medically excused for an absence of only one day, which did not meet the threshold to be covered by FMLA. Thus, the termination was not an FMLA violation. The plaintiff countered that because she was not formally terminated until four days after her call and was still on crutches, her employer had notice that she had an FMLA serious health condition (an absence of three or more days). As such, her termination was an FMLA violation. Although the Fourth Circuit credited the plaintiff for coming up with a “novel” argument, it stated that her “contention that she could simply stay home for three days and then claim she was incapacitated without providing an iota of medical evidence to support that fact is incurably flawed.”
TOP TIP: PRESERVING THE RIGHT TO DEMAND EMPLOYEE PASSCODES TO ELECTRONIC DEVICES IN A “BYOD” WORLD
“BYOD” stands for “bring your own device” – a recent trend where companies let employees use their personal electronic devices for business and the company defrays the cost, in whole or part. It is seen as a “win/win.” Jane can use her I-Phone for work rather than that boring Blackberry and the company saves on cost. But alongside this trend, legislation to prevent employers from requiring, or even requesting, that employees provide passcodes to “personal” devices or accounts has been enacted by more and more States. What is “personal” vs. “business” may be unclear where devices have a mixed personal/business use.
By way of background, as we explained in our E-Update in May of 2012, in 2012 Maryland became the first State in the nation to prohibit employers from requesting or requiring applicants or employees to provide passwords to personal electronic devices or accounts. Since then, Illinois, California, Utah, and most recently, New Mexico (in April 2013) have enacted similar laws. Legislation also has been sent to New Jersey Governor Christie’s desk. Bills are pending in many other states.
These laws do not foreclose employers from demanding that employees disclose passwords to business devices and accounts and generally acknowledge that employers can control conduct on company equipment. However, the line between “business” and “personal” may be less clear than this distinction implies. If an employer permits employees to use their own electronic devices for business under a BYOD policy, or if an employer permits business devices to also be used for personal communications, such as for private Facebook, Twitter and other private online accounts, the passwords and devices are both personal and business. Written policies are necessary, in such cases, to set clear expectations about the extent of an employee’s legitimate expectation of privacy, if any, when using a device that is subsidized by the employer.
At minimum, the policy should contain the following:
Make clear that any device used for business purposes must be protected with a pass code to ensure that if the device is lost, company data is not at risk;
Establish that pass codes to access devices issued by the employer or paid for by the employer, in whole or in part, are agreed by both employer and employee to be business information and not personal information. As such, the employee must agree as a condition of using the device, that passwords be disclosed to the company;
Specify that employees understand and agree that if they put personal information on the device, they will not have an expectation of privacy in the data given the business purpose of the device;
Establish that employees are responsible for data security and for ensuring that business information on such devices is not uploaded to any cloud account other than a company-secured account (and advise employees that company IT personnel may demand access to the device to ensure that no impermissible data transfers take place);
Make clear that the company has the ability and the right to remotely “wipe” a device in the event that it is lost or not returned at termination, and that any personal data on the device may, as a consequence, be at risk of loss; and
Identify protocols for termination, including for transfer of personal data from a company device when employment ends and/or for transferring or deleting business data from a personal device used for business purposes.
Even with written policies, employers should be circumspect in dealing with employee personal data. Policies may not insulate a company completely from potential liability (for example, the pending New Jersey legislation states that employees may not waive their privacy rights under the law; a company policy that disclaims a right to privacy could be second-guessed). In addition, courts have found viable invasion of privacy claims where employers accessed employee personal data on company devices beyond what was reasonably necessary under the circumstances. As such, companies should exercise discretion in deciding whether to access employee personal data, even on a business device under a right afforded by a policy.