Three policies in an employer’s handbook violated Section 8(a)(1) of the National Labor Relations Act, the U.S. Court of Appeals for the District of Columbia Circuit has held, agreeing with the National Labor Relations Board. The Court disagreed, however, that two other policies found illegal by the NLRB violated the Act. Hyundai Shipping Agency, Inc. v. NLRB, No. 11-1351 (D.C. Cir. Nov. 6, 2015).

An unfair labor practice charge was filed by a former employee alleging she was terminated for engaging in protected, concerted activities in violation of the NLRA. An NLRB administrative law judge dismissed that allegation, but found seven rules in the employer’s employee handbook violated the Act. On appeal, the Board disagreed with the ALJ’s determination regarding two of the rules, but upheld the ALJ’s decision finding five other rules violated the Act. Hyundai Shipping then appealed to the U.S. Court of Appeals for the District of Columbia.

The Court first determined whether the NLRB had jurisdiction to consider the lawfulness of the five handbook rules. Under Section 10(b) of the Act, the NLRB’s General Counsel may prosecute an unfair labor practice charge by issuing an unfair labor practice complaint, but the complaint’s allegations must be “closely related” to the allegations in the charge. The Court applied the test for determining whether an allegation is “closely related,” which it had established in Dry Plastics & Glass Co. v. NLRB, 44 F.3d 1017 (D.C. Cir. 1995): “the Board looks to whether a complaint allegation (1) involves the same legal theory as the charge allegation, (2) arises from the same factual circumstances or sequence of events as the charge allegation, and (3) raises similar defenses as the charge allegation.” Dry Plastics also establishes how to apply the test. There, the Board adopted the dissenting view of then-Judge Stevens in NLRB v. Braswell Motor Freight Lines, Inc., 486 F.2d 743 (7th Cir. 1973), and held “the Board’s jurisdiction should be tested by the General Counsel’s allegations rather than his proof.”

The Court concluded jurisdiction existed as to four rules the General Counsel claimed caused the employee’s termination, but not as to the fifth rule, which had no link to the termination.

The Court held an oral rule prohibiting employees from revealing information about matters under investigation was unlawful, saying, a “blanket confidentiality rule clearly limit[s] employees’ § 7 rights to discuss their employment…the question is whether Hyundai has presented a legitimate and substantial business justification for the rule, outweighing the adverse effect on the interests of employees.” The Court rejected the company’s argument that federal and state anti-discrimination statutes and guidelines, which require confidentiality in many instances, constitutes such a justification. While recognizing an employer’s obligation to comply with these laws may provide a business justification, a rule banning employee discussion of all investigations is unlawfully overbroad.

The Court also agreed with the Board that two other common handbook provisions were unlawfully overbroad:

• A confidentiality provision in the electronic communications policy which concluded with, “employees should only disclose information or messages from these [sic] systems to authorized persons.” The Board had held a reasonable employee could read this rule to prevent the sharing of any information exchanged on Hyundai’s electronic communications network, thereby restricting employees’ ability to share information about their terms and conditions of employment.   The Court held the Board’s conclusion was a reasonable application of the existing Board case law.

• The rule that employees could be disciplined, including terminated, for “[p]erforming activities other than Company work during working hours.”   The Court noted the Board distinguishes between “working time,” which excludes breaks, and “working hours,” the period from the beginning to the end of a shift, breaks and all. Employers may not maintain rules that limit an employee’s right to engage in protected, concerted activity during non-work time.

However, the Court refused to enforce the Board’s order relating to the rule that, in the Court’s parlance, “urged” employees to voice their complaints to their immediate supervisor or Human Resources: Voice your complaints directly to your immediate superior or to Human Resources through our “open door” policy. Complaining to your fellow employees will not resolve problems. Constructive complaints communicated through the appropriate channels may help improve the workplace for all.

In distinguishing the rule from similar rules the Board had found unlawful, the Court noted that, while the rule urged employees to raise complaints with their supervisor or HR, it was “neither mandatory nor preclusive of alternatives….”

This decision is a welcome reminder that although broad, the NLRB’s jurisdiction is not without limits. The decision also is an important reminder the NLRB’s initiative on employer’s handbook rules and policies is alive and well and that employers should have their rules and policies reviewed on a regular basis to keep up with changes in the law. Moreover, as this case demonstrates, an unfair labor practice charge alleging an unlawful termination can morph into a complaint claiming that an employer unlawfully maintained unlawful rules and policies, another compelling reason to ensure policies and rules can withstand an NLRB review.