On Aug. 29, 2022, the National Labor Relations Board (NLRB) ruled in a 3-2 decision along party lines in Tesla, Inc. , 370 NLRB No. 131 (2022), that an employer cannot impose any restriction on its employees’ right to wear union apparel or clothing with union insignia unless the employer can establish “special circumstances” warranting such restrictions. In doing so, the NLRB expressly reversed its position set forth in Wal-Mart Stores, Inc., 368 NLRB No. 146 (2019), which allowed employers to impose certain “partial” or “limited” restrictions on their employees’ right to wear union apparel without needing to justify those restrictions with special circumstances.
Tesla, Inc., arises from a charge that Tesla committed an unfair labor practice by implementing a workplace rule requiring employees at its Fremont, California, facility to wear either company-issued uniforms with the Tesla logo or their own clothes in the same colors with any non-Tesla logos and emblems covered by black tape. A few months after the union began its organizing campaign at its Fremont facility, Tesla began strictly enforcing this policy. However, Tesla’s policy still allowed employees to wear union buttons, pins and stickers on their clothing. Tesla, therefore, argued that its policy complied with NLRB law as stated in Wal-Mart Stores, Inc.
The Walmart Stores, Inc., Balancing Test
The longstanding rule preceding Walmart Stores, Inc., was established in Republic Aviation Corp. v. NLRB. There, the NLRB ruled that employees displaying union insignia in the workplace is protected activity. Although the NLRB acknowledged that employers have an interest in managing their business in an orderly fashion, the NLRB ruled that employers could restrict the display of union insignia activity only if necessary because of “special circumstances,” such as maintaining production, ensuring safety, preventing the alienation of customers, maintaining decorum by restricting offensive or inflammatory displays, or, in the healthcare setting, preventing any adverse effects on patients. The rule had to be narrowly drawn, restricting employees from displaying union insignia only in areas where the circumstances justified the rule.
In Walmart Stores, Inc., the NLRB altered this “special circumstances” rule. The Walmart NLRB adopted a new standard that permitted partial or limited restrictions even in the absence of “special circumstances” if “legitimate justifications” existed that outweighed any adverse impact on employees. Specifically, the Walmart NLRB concluded that Walmart’s rule restricting the size of union logos in places where customers are present had “legitimate justifications — to enhance the customer shopping experience and protect its merchandise from theft or vandalism” — sufficient to “outweigh the adverse impact on employees’ Section 7 rights.” On the other hand, there were insufficient justifications to support a rule restricting the size of union logos in places where customers were not present.
The Tesla, Inc., Special Circumstances Test
With its new decision in Tesla, the NLRB has changed course again, rejecting the Wal-Mart standard, and returning to the strict “special circumstances” standard. In so doing, the NLRB held that Tesla failed to present evidence of “special circumstances” for the rule requiring employees to cover union logos with black tape and therefore violated the National Labor Relations Act.
Going forward, employers risk committing unfair labor practices if they place limitations on the display of union insignia if they cannot demonstrate “special circumstances,” such as maintaining production, ensuring safety, preventing the alienation of customers, causing damage to the employer’s products, maintaining decorum by restricting offensive or inflammatory displays, preventing any adverse effects on patients in the case of a healthcare setting, or trying to extend a restriction beyond the area actually tied to the special circumstances.
How to React
Employers should proceed with caution before maintaining or implementing any workplace rules that would in any way restrict employees from displaying union insignia. Employers will need to be prepared to articulate the special circumstances justifying such restrictions.
Additionally, employers should take note of the Tesla decision as a harbinger for other precedential changes from the NLRB expected in coming months. The NLRB now has a full complement of members with a Democratic majority and a General Counsel who clearly espoused an intent to seek significant changes to longstanding NLRB precedents. Accordingly, employers should regularly monitor NLRB decisions to ensure that their policies and conduct are in compliance with legal standards that are in great flux.
For assistance with such matters, or for more information on this topic, please contact the authors, your McGuireWoods contact, or a member of the firm’s labor and employment team.