NLRA limitations on employee handbooks and policies

Yesterday, I guest-taught labor law (specifically, social media and the NLRA) at Penn State Law. We covered the NLRB's review of employee handbooks and policies. What makes a policy overbroad, and therefore unlawful under the NLRA?

Not official use.

I'd say it's a question I get all the time, but the truth is that it's a question I almost never get. Most employers don't even realize it's an issue. "NLRA? I don't have any union employees" - it's not that simple. Even non-union employees have the right under the NLRA to engage in protected concerted activity, not to mention union organizing activities. So, employee handbooks must not infringe on those rights.

At the end of 2017, the NLRB issued its opinion in Boeing, announcing a new standard of review for employee handbooks. The Board placed emphasis on balancing the employer's business justifications for a policy with the employee's NLRA rights:

Under the standard we adopt today, when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things:  

(i) the nature and extent of the potential impact on NLRA rights, and 

(ii) legitimate justifications associated with the rule.

This is a more employer-friendly rule, although its vagueness will be difficult for employers to apply prospectively. The Board provided some clarification with three categories of policies:

• Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. Examples of Category 1 rules are the no-camera requirement in this case, the “harmonious interactions and relationships” rule that was at issue in William Beaumont Hospital, and other rules requiring employees to abide by basic standards of civility.

• Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications. 

• Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example of a Category 3 rule would be a rule that prohibits employees from discussing wages or benefits with one another.

Are employee handbooks legally binding contracts in Pennsylvania?

Can an employee sue his or her employer based on a breach of the terms of an employee handbook or manual? Law101: The answer to every question is always, "it depends."

Generally, the answer to this question is "no" - but with the qualifier that... wait for it... "it depends." Ordinarily, I wouldn't rely on an unpublished federal trial court opinion for state law issues, but I particularly like this summary (and it relies on published Pennsylvania appellate court opinions):

[W]e note that "the presumption under Pennsylvania law is that all employment is at-will, and, therefore, an employee may be discharged for any reason or no reason." Luteran v. Loral Fairchild Corp., 688 A.2d 211 (Pa. Super. Ct. 1997). The burden of overcoming the presumption rests squarely with the employee. Rutherford v. Presbyterian-University Hospital, 612 A.2d 500 (Pa. Super. Ct.1992). In order to rebut the presumption of at-will employment, a party must establish one of the following: (1) an agreement for a definite duration; (2) an agreement specifying that the employee will be discharged for just cause only; (3) sufficient additional consideration or (4) an applicable recognized public policy exception. Luteran.  

The Supreme Court of Pennsylvania in Luteran stressed that when alleging that an employee handbook created an implied contract, the handbook must contain a clear indication that the employer intended to overcome the at-will presumption. Moreover, courts should not presume that the employer intended to be legally bound by distributing the handbook nor that the employee believed that the handbook was a legally binding instrument. Id. The court stated that absent any language that the handbook was intended to be a legally binding contract, it could not hold that the employer intended to form a contract. This was in spite of the fact that the handbook stated that an employee "may only be discharged for just cause."

Consolmagno v. Home Depot, No. 06-1097 (W.D. Pa. 2006).

In other words, the courts generally assume that a handbook is not a contract "absent any language that the handbook was intended to be a legally binding contract." As a practical matter, as someone who has seen dozens of employee handbooks, I'll note that:

• I have never seen an employee handbook that says, "this is totally a contract" or anything even remotely resembling that; and
• Almost every handbook I've seen says the exact opposite, "THIS IS NOT A CONTRACT." (with varying degrees and combinations of obnoxious bold, all caps, underlined, and super-sized text).

Employers may wish to consider adding such a disclaimer to their handbooks. As an employer, would you rather go into court and ask it to apply a presumption? Or ask it to apply both the presumption *and* the text of the disclaimer? That's a no-brainer. I often draft or revise handbooks, and the "this is not a contract" disclaimer goes in every one. 

For Ohio law on this issue, check out Jon Hyman's Ohio Employer Law Blog. 

New NLRB Memo on Employee Handbooks

The NLRB General Counsel issued a new memo: Report of the General Counsel Concerning Employer Rules. The overall theme is that employers may violate the National Labor Relations Act (NLRA) by merely maintaining a workplace rule that chills protected activity.

Frankly, the memo is a tad on the hypersensitive side. For example, this policy gets singled out as unlawful:

Be respectful to the company, other employees, customers, partners, and competitors.

Yes, you read that correctly . . . a policy requiring employees to "be respectful" is illegal in the eyes of the NLRB GC. See also:

Do "not make fun of, denigrate, or defame your co-workers, customers, franchisees, suppliers, the Company, or our competitors."

Overall, the memo emphasizes that context and clarity are important. If employees could reasonably construe the policy to prohibit NLRA-protected activity, then it is overly broad. And, as you can easily infer from the memo, the term "reasonably" has been stretched pretty far.

Miles on Employee Hanbooks

Straight from the shameless self-promotion department, it's my latest article: Three Times a Good Employee Handbook will Save Employers in the latest issue of Pennsylvania Business Central. Enjoy!

Cyber Monday is Here - 54% of Workers to Shop Online at Work this Season

It's Cyber Monday! Do you know what that means? No, not great Internet sales - well, I mean that too - but this is an employment law blog after all. So, it means a blog entry about Internet shopping at work.

An AllVoices article discusses some interesting stats from a recent CareerBuilder survey, including the titular warning: Some Employers Fire Workers for Shopping Online. The interesting stats:

• 54% of employees expect to spend at least some time at work online holiday shopping;
• 10% say they will spend at least three hours shopping at work; and
• 7% of employers have fired someone for shopping online at work.

The article is aimed at employees, and provides three rules summarily described as:

1. Learn the Rules
2. Don't Get Carried Away; and
3. Show Some Restraint.

I think this provides a nice framework for me to lay down some rules of thumb for employers:

1. Explain the Rules - If you don't already have one, adopt a policy regarding Internet usage and include it in your employee handbook (which you've no doubt made readily available to employees, right?). Also, explain employees' expectation of privacy (or more likely, lack thereof) on work computers and networks. If online shopping has been problematic, you may even go so far as to send an email out reminding employees of the applicable policies.

2. Don't Let Employees Get Carried Away - It's one thing for an employee to pop over to Amazon on a lunch break, or even a "coffee break" - but it is quite another to spend over three hours shopping (reminder: stat above claims 10% of employees will). If it becomes a problem, do something about it.

3. Show Some Restraint - Nobody wants to be the employer who fired an employee for buying little Johnny a rocking horse for Christmas at work. This is probably an area where a warning is appropriate if online shopping becomes a problem. Unless you want to be viewed as a modern-day Scrooge, wait until you've explained the rule (see 1), identified employee(s) getting carried away (see 2), and warned them of the problem (see 3) to pull the trigger on a termination.

Is Violation of Employer's Computer Use Policy a Federal Crime?

The Ninth Circuit handed down its opinion in U.S. v. Nosal today, adopting a narrow view of the Computer Fraud and Abuse Act. Judge Kozinski opens the opinion with a great intro:

Computers have become an indispensable part of our daily lives. We use them for work; we use them for play. Sometimes we use them for play at work. Many employers have adopted policies prohibiting the use of work computers for nonbusiness purposes. Does an employee who violates such a policy commit a federal crime? How about someone who violates the terms of service of a social networking website? This depends on how broadly we read the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030.

It's a pretty short opinion, so feel free to read the whole thing. [Spoiler Alert] The Court adopted a narrow view of the statute:

We need not decide today whether Congress could base criminal liability on violations of a company or website’s computer use restrictions. Instead, we hold that the phrase "exceeds authorized access" in the CFAA does not extend to violations of use restrictions. If Congress wants to incorporate misappropriation liability into the CFAA, it must speak more clearly . . . . This narrower interpretation is also a more sensible reading of the text and legislative history of a statute whose general purpose is to punish hacking—the circumvention of technological access barriers—not misappropriation of trade secrets—a subject Congress has dealt with elsewhere. Therefore, we hold that "exceeds authorized access" in the CFAA is limited to violations of restrictions on access to information, and not restrictions on its use.

(emphasis in original). The Court notes that there is a circuit split on this issue, so maybe we'll get some Supreme intervention.

HT: Orin Kerr at Volokh Conspiracy.

Disney's Employee Handbook from 1943

Major hat tip to Tim Eavenson, who dug up this little gem: The Ropes at Disney's - an employee handbook from 1943, published by their Personnel Department. It's like taking a time machine back to the HR department of the 40s.

The first thing I noticed was how friendly the handbook seemed. It even included some cool illustrations (I mean, it is Disney after all). There were, however, a few signs of the times. For example, there are different sick policies for men and women. Men got 5 sick days with no more than 3 consecutive, whereas women received 10 days and up to 5 consecutive. And then there's the Disney Penthouse Club - "Men only! Sorry, gals. . . . ."

These are terms I generally try to avoid in employee handbooks. That said, I think the 1943 handbook is still a vast improvement over the 1970s policies of Tiger Mike (the all-time champ of great HR).

Update: Jon Hyman has also weighed in on this old Disney handbook - We've Come a Long Way Baby. He notes the inclusion of violation of the United States Espionage Act as grounds for termination.

Posted by Philip Miles, an attorney with McQuaide Blasko in State College, Pennsylvania in the firm's civil litigation and labor and employment law practice groups.