National Labor Relations Board Issues Handbook Victory for Employers

December 18, 2020

On Dec. 10, 2020, the National Labor Relations Board (NLRB) issued a decision in BMW Manufacturing Co. regarding whether various rules and policies in an employer’s handbook violated the National Labor Relations Act (NLRA). Specifically, the NLRB considered whether the rules and policies violated the non-interference obligations of NLRA Section 8(a)(1). In a win for employers, the NLRB found in favor of BMW on nearly every rule, including BMW’s non-disparagement policies.

To evaluate the employer’s rules and policies, the NLRB relied on its 2017 decision in The Boeing Company. The Boeing panel advised that, in assessing an employer’s rule for a potential violation of the NLRA, the NLRB should balance (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule. The application of this balancing test compels one of the following three classifications:

  • Category 1 Rules. These rules are always lawful because either (a) based on a reasonable interpretation, the rule does not interfere with NLRA rights; or (b) the justification for the rule outweighs any negative impact on employee rights.
  • Category 2 Rules. These rules require individualized scrutiny regarding potential interference with NLRA rights. The NLRB must determine whether any adverse impact on NLRA rights outweighs the employer’s justification for the rule.
  • Category 3 Rules. These rules are always unlawful because they negatively impact NLRA protected rights and the employer cannot sufficiently justify the rule.

The application of these criteria in BMW Manufacturing Co. provides helpful guidance on the NLRB’s assessment of common employer rules and policies.

Non-Disparagement Policies. The employer’s handbook included policies requiring employees to “demonstrate respect for” and “not engage in behavior that reflects negatively on” BMW. Implementing Boeing’s balancing test, the NLRB weighed BMW’s legitimate interests in employee respect and loyalty against the employees’ NLRA rights. The panel stressed that non-disparagement policies were necessary to protect BMW’s interests and striking these neutral rules threatened the loyalty essential to an employment relationship. Without delving into the employees’ interests, the NLRB found the non-disparagement provisions to be lawful as a Category 1(b) rule and provided valuable precedent for employers moving forward.

As the sole dissenter, NLRB member Lauren McFerran cautioned that the majority’s interpretation of Boeing would empower employers to enact rules without any concern for employee rights. Further, she predicted that the ruling would likely lead future panels to affirm vague non-disparagement policies. Since the 2017 Boeing ruling, NLRB decisions related to non-disparagement policies have continued to shift in favor of employers.

Offensive Language. The NLRB also considered BMW’s rule prohibiting offensive language in the workplace. The panel found BMW had sufficient business justifications for the rule because it promoted a “harmonious” work environment. Further, a reasonable employee would not interpret the offensive language prohibition as infringing on any employee rights. Thus, the NLRB held that employer rules preventing offensive language in the workplace do not violate NLRA Section 8(a)(1).

Personal Recording Provisions. BMW’s handbook included a provision that prohibited employees from using personal recording devices in the workplace and allowed the use of only business recording devices with management approval. In its 2017 decision, the Boeing panel considered a similar policy and weighed the employer’s interest in protecting proprietary information against the “slight” adverse impact on employee rights. The NLRB, relying on Boeing, ruled that the no-recording provision was lawful as a Category 1(b) rule.

Confidential Information Policy. Finally, employees challenged the handbook’s confidentiality policy based on its definition of confidential business information. Employees believed that BMW’s inclusion of “personal and financial information” in the definition for confidential business information was overreaching and unlawful. Utilizing reasoning from another recent NLRB decision, the NLRB found that a reasonable employee, when reading the policy as a whole, would interpret the policy to protect only the employer’s proprietary information rather than all employees’ personal and financial information.

In light of BMW Manufacturing Co., employers should consider reviewing their employee handbooks to ensure compliance with the NLRA. This decision addresses various employer rules and policies that can be challenging to navigate. In addition, employers should continue to monitor NLRB developments closely. The recent U.S. presidential election results will alter the ideological composition of the NLRB, which can have a significant effect on NLRB standards.

For assistance in compliance with the NLRA, or for any other question related to employment law, contact the authors of this article or another member of the McGuireWoods labor and employment team.