D.C. Court Rules Overbroad Workplace Policies Unlawful

Background

Cintas employs approximately 27,000 workers and supplies workplace uniforms to customers throughout North America. The Cintas Partner Reference Guide, an employee handbook distributed to all employees, whom Cintas refers to as 'partners,' includes a discussion of how employees are expected to treat confidential information. Under the heading 'Cintas Culture,' the handbook stated:

We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its partners, new business efforts, customers, accounting and financial matters.

In a separate section on discipline, the handbook warned employees that they could be sanctioned for 'violating a confidence' or for the 'unauthorized release of confidential information.'

The Union of Needletrades, Industrial and Textile Employees, also known as UNITE HERE (the 'Union'), filed an unfair labor practice charge with the National Labor Relations Board (the 'NLRB' or 'Board'), alleging that the confidentiality rule violated Sections 7 and 8 (a) (1) of the National Labor Relations Act (the 'NLRA'). Section 7 of the NLRA protects the right of employees to engage in protected concerted activities (with or without a union) 'typically group activities aimed at improving working conditions, such as wages and benefits. Examples of such protected concerted activities include: 1) two or more employees addressing their employer about improving their working conditions and pay; 2) one employee speaking to her or his employer on behalf of herself or himself and one or more co-workers about improving workplace conditions; and 3) two or more employees discussing pay or other work-related issues with each other. The Administrative Law Judge (the 'ALJ') held that the mere existence of the confidentiality rule violated the NLRA and the Board unanimously affirmed the ALJ's decision. Cintas petitioned the D.C. Circuit for review of, and the Board sought enforcement of, the Order.

Court of Appeals Decision

On appeal, Cintas argued, among other things, that: 1) the challenged sections of its handbook did not explicitly prohibit employees from engaging in legally protected activity; 2) there was no evidence that any employee actually interpreted the confidentiality rule to prohibit protected activity; 3) Cintas never interpreted nor applied the confidentiality rule to prohibit protected activity; and 4) the Board misinterpreted the confidentiality provision.

The court, however, rejected these arguments, citing both NLRB and Circuit Court precedent and holding that even in the absence of an express limitation on employee rights, a company policy statement still violated Section 8(a)(1) of the NLRA if employees would reasonably construe the policy to prohibit them from discussing the terms and conditions of their employment. Moreover, the court found that the Board was required to determine only whether employees would reasonably interpret the rule to interfere with their rights, not whether any employee actually reached that conclusion.

Among its other arguments, Cintas asserted that it never applied the confidentiality rule in a coercive manner. In support of its position, Cintas offered testimony that employees' names, wages and other terms and conditions of employment were published and distributed on Union flyers, but the company took no disciplinary action. The court found this argument to be unpersuasive, stating that the mere maintenance of an overbroad rule that interfered with the exercise of Section 7 rights violates the NLRA and specifically noted that the NLRB was under 'no obligation to consider whether the disputed restriction has ever been enforced.'

The D.C. Circuit also rejected what it described as the 'gravamen' of Cintas' appeal ' that the Board's interpretation of the confidentiality rule itself was too broad. In this regard, the court explained that the NLRB's interpretation of the rule was 'reasonably defensible' and thus entitled to 'considerable deference.' The court distinguished the Cintas confidentiality rule from others that have been upheld, noting that such rules were specifically limited by the context or language 'so as to be clear to employees that the rules did not restrict employees' [S]ection 7 rights.' The court observed that '[a] more narrowly tailored rule that does not interfere with protected employee activity would be sufficient to accomplish the Company's presumed interest in protecting confidential information.'

The Guardsmark Decision

The case was decided on the heels of the D.C. Circuit's decision in Guardsmark, LLC v. NLRB, 475 F.3d 369 (DC Cir. 2007), another instance where overbroad workplace policies were held to violate employees' Section 7 rights to engage in protected concerted activities. In that case, Guardsmark, LLC ('Guardsmark'), a nationwide company providing security guard services, distributed an employee handbook to its uniformed security employees that, among other policies, contained the following rules: 1) a chain-of-command rule, which prohibited employees from registering any complaints with any client representative; 2) a no-solicitation rule, which prohibited solicitation 'at all times while on duty or in uniform'; and 3) a no-fraternization rule, which prohibited employees from 'fraterniz[ing] on duty or off duty' with other employees.

Background

The Service Employees International Union Local 24/7 ('Local 24/7'), which represented Guardsmark's employees in San Francisco, filed an unfair labor practice charge. Thereafter, the NLRB's General Counsel issued a complaint, asserting that all three rules violated the employees' right to engage in protected concerted activities. The NLRB ruled that both the chain-of-command rule and no-solicitation rule were unlawful, but that the no-fraternization rule was permissible because it only applied to personal relationships. Guardsmark petitioned the D.C. Circuit to review the NLRB's rulings regarding the chain-of-command and no-solicitation rules while Local 24/7 petitioned for review of the fraternization rule.

Court of Appeals Decision

The Court of Appeals agreed with the Board's conclusion that the chain-of-command rule, which explicitly stated '[d]o not register complaints with any representative of the client,' violated the NLRA. The court explained that under the NLRA employees have a 'protected right to solicit sympathy, if not support, from the general public ' [and] customers' regarding their terms and conditions of employment. Because the chain-of-command rule's prohibition against complaining to clients was not limited to the period while the employees were on duty, it was overly broad in violation of the NLRA. The court rejected Guardsmark's alleged business purpose behind the rule (namely, efficient dispute resolution), as Guardsmark never argued that this purpose represents a special circumstance necessary to employee discipline. Moreover, the court was not persuaded by the fact that Guardsmark never enforced the rule, stating (as it subsequently repeated in Cintas) that 'mere maintenance of a rule likely to chill Section 7 activity may constitute an unfair labor practice even absent evidence of enforcement.'

Similarly, the court upheld the Board's conclusion that the solicitation rule was overbroad and unlawful. The court noted that the NLRB presumes that 'a rule prohibiting employee solicitation, which is not by its terms limited to working time' would violate the NLRA, and as such the Board's decision was defensible. Here, the rule prohibited solicitation not only 'while on duty [ ' but also while ' ] in uniform.' The Board found without merit Guardsmark's position that an employee would interpret the rule to permit off duty solicitation simply by removing or covering a uniform. Further, the NLRB was not persuaded that Guardsmark's 'clarification' of the solicitation rule to some employees was a sufficient cure, as all employees covered by the rule were not notified.

The NLRB ruled that the employees would understand that the fraternization rule only targeted 'personal entanglements,' not NLRA-protected activity. The court, however, disagreed. Specifically, this rule stated: 'While on duty you must NOT ' fraternize on duty or off duty, date or become overly friendly with the client's employees or with coemployees.' The court analyzed the language by giving independent meaning to each and every word. As a result, the court rejected the NLRB's interpretation of the word 'fraternize,' which the Board had found to be synonymous with 'dating' and 'becoming overly friendly.' The court concluded that 'fraternize' must have some other meaning, separate and apart from the other words and phrases in the rule itself, otherwise the use of the word 'fraternize' would be superfluous. As the most common meaning of the word 'fraternize' is to associate or mingle on fraternal terms, the court held that the rule explicitly prohibited fraternal discussions of terms and conditions of employment. Therefore, the court held the rule to be in direct violation of the NLRA.

Practical Impact of Cintas And Guardsmark

These decisions serve as a reminder that the mere existence of a policy that is likely to chill protected activity ' whether explicitly or through reasonable interpretation ' can be deemed to be an unfair labor practice, even absent evidence of enforcement. Therefore, policies should be narrowly tailored so that employees cannot reasonably interpret those policies to prohibit discussing the terms and conditions of their employment.

Howard S. Lavin is the Chair of the Employment Law Practice Group and a Partner at Stroock & Stroock & Lavan LLP. Elizabeth E. DiMichele is a Special Counsel in Stroock's Employment Law Practice Group.

In two recent decisions, the District of Columbia United States Court of Appeals has ruled overbroad workplace policies unlawful, even when those policies did not expressly prohibit protected workplace discussions about terms and conditions of employment, and even when there was no evidence that the policies had been enforced to punish protected workplace discussions. This article discusses these decisions, and their implications for employers that have adopted, or are contemplating adoption of, workplace policies that might be deemed overbroad.

The Cintas Corp. Decision

In Cintas Corp. v. National Labor Relations Board , 482 F.3d 463 (D.C. Cir. 2007), the United States Circuit Court of Appeals for the District of Columbia held that the confidentiality rule promulgated by Cintas Corporation ('Cintas') was unlawful because it could be construed to prohibit employees from discussing the terms and conditions of their employment, even though: 1) the rule did not expressly forbid protected workplace discussions; and 2) there was no evidence that the rule was used to prohibit such protected workplace discussions.

Background

Cintas employs approximately 27,000 workers and supplies workplace uniforms to customers throughout North America. The Cintas Partner Reference Guide, an employee handbook distributed to all employees, whom Cintas refers to as 'partners,' includes a discussion of how employees are expected to treat confidential information. Under the heading 'Cintas Culture,' the handbook stated:

We honor confidentiality. We recognize and protect the confidentiality of any information concerning the company, its business plans, its partners, new business efforts, customers, accounting and financial matters.

In a separate section on discipline, the handbook warned employees that they could be sanctioned for 'violating a confidence' or for the 'unauthorized release of confidential information.'

The Union of Needletrades, Industrial and Textile Employees, also known as UNITE HERE (the 'Union'), filed an unfair labor practice charge with the National Labor Relations Board (the 'NLRB' or 'Board'), alleging that the confidentiality rule violated Sections 7 and 8 (a) (1) of the National Labor Relations Act (the 'NLRA'). Section 7 of the NLRA protects the right of employees to engage in protected concerted activities (with or without a union) 'typically group activities aimed at improving working conditions, such as wages and benefits. Examples of such protected concerted activities include: 1) two or more employees addressing their employer about improving their working conditions and pay; 2) one employee speaking to her or his employer on behalf of herself or himself and one or more co-workers about improving workplace conditions; and 3) two or more employees discussing pay or other work-related issues with each other. The Administrative Law Judge (the 'ALJ') held that the mere existence of the confidentiality rule violated the NLRA and the Board unanimously affirmed the ALJ's decision. Cintas petitioned the D.C. Circuit for review of, and the Board sought enforcement of, the Order.

Court of Appeals Decision

On appeal, Cintas argued, among other things, that: 1) the challenged sections of its handbook did not explicitly prohibit employees from engaging in legally protected activity; 2) there was no evidence that any employee actually interpreted the confidentiality rule to prohibit protected activity; 3) Cintas never interpreted nor applied the confidentiality rule to prohibit protected activity; and 4) the Board misinterpreted the confidentiality provision.

The court, however, rejected these arguments, citing both NLRB and Circuit Court precedent and holding that even in the absence of an express limitation on employee rights, a company policy statement still violated Section 8(a)(1) of the NLRA if employees would reasonably construe the policy to prohibit them from discussing the terms and conditions of their employment. Moreover, the court found that the Board was required to determine only whether employees would reasonably interpret the rule to interfere with their rights, not whether any employee actually reached that conclusion.

Among its other arguments, Cintas asserted that it never applied the confidentiality rule in a coercive manner. In support of its position, Cintas offered testimony that employees' names, wages and other terms and conditions of employment were published and distributed on Union flyers, but the company took no disciplinary action. The court found this argument to be unpersuasive, stating that the mere maintenance of an overbroad rule that interfered with the exercise of Section 7 rights violates the NLRA and specifically noted that the NLRB was under 'no obligation to consider whether the disputed restriction has ever been enforced.'

The D.C. Circuit also rejected what it described as the 'gravamen' of Cintas' appeal ' that the Board's interpretation of the confidentiality rule itself was too broad. In this regard, the court explained that the NLRB's interpretation of the rule was 'reasonably defensible' and thus entitled to 'considerable deference.' The court distinguished the Cintas confidentiality rule from others that have been upheld, noting that such rules were specifically limited by the context or language 'so as to be clear to employees that the rules did not restrict employees' [S]ection 7 rights.' The court observed that '[a] more narrowly tailored rule that does not interfere with protected employee activity would be sufficient to accomplish the Company's presumed interest in protecting confidential information.'

The Guardsmark Decision

The case was decided on the heels of the D.C. Circuit's decision in Guardsmark, LLC v. NLRB , 475 F.3d 369 (DC Cir. 2007), another instance where overbroad workplace policies were held to violate employees' Section 7 rights to engage in protected concerted activities. In that case, Guardsmark, LLC ('Guardsmark'), a nationwide company providing security guard services, distributed an employee handbook to its uniformed security employees that, among other policies, contained the following rules: 1) a chain-of-command rule, which prohibited employees from registering any complaints with any client representative; 2) a no-solicitation rule, which prohibited solicitation 'at all times while on duty or in uniform'; and 3) a no-fraternization rule, which prohibited employees from 'fraterniz[ing] on duty or off duty' with other employees.

Background

The Service Employees International Union Local 24/7 ('Local 24/7'), which represented Guardsmark's employees in San Francisco, filed an unfair labor practice charge. Thereafter, the NLRB's General Counsel issued a complaint, asserting that all three rules violated the employees' right to engage in protected concerted activities. The NLRB ruled that both the chain-of-command rule and no-solicitation rule were unlawful, but that the no-fraternization rule was permissible because it only applied to personal relationships. Guardsmark petitioned the D.C. Circuit to review the NLRB's rulings regarding the chain-of-command and no-solicitation rules while Local 24/7 petitioned for review of the fraternization rule.

Court of Appeals Decision

The Court of Appeals agreed with the Board's conclusion that the chain-of-command rule, which explicitly stated '[d]o not register complaints with any representative of the client,' violated the NLRA. The court explained that under the NLRA employees have a 'protected right to solicit sympathy, if not support, from the general public ' [and] customers' regarding their terms and conditions of employment. Because the chain-of-command rule's prohibition against complaining to clients was not limited to the period while the employees were on duty, it was overly broad in violation of the NLRA. The court rejected Guardsmark's alleged business purpose behind the rule (namely, efficient dispute resolution), as Guardsmark never argued that this purpose represents a special circumstance necessary to employee discipline. Moreover, the court was not persuaded by the fact that Guardsmark never enforced the rule, stating (as it subsequently repeated in Cintas) that 'mere maintenance of a rule likely to chill Section 7 activity may constitute an unfair labor practice even absent evidence of enforcement.'

Similarly, the court upheld the Board's conclusion that the solicitation rule was overbroad and unlawful. The court noted that the NLRB presumes that 'a rule prohibiting employee solicitation, which is not by its terms limited to working time' would violate the NLRA, and as such the Board's decision was defensible. Here, the rule prohibited solicitation not only 'while on duty [ ' but also while ' ] in uniform.' The Board found without merit Guardsmark's position that an employee would interpret the rule to permit off duty solicitation simply by removing or covering a uniform. Further, the NLRB was not persuaded that Guardsmark's 'clarification' of the solicitation rule to some employees was a sufficient cure, as all employees covered by the rule were not notified.

The NLRB ruled that the employees would understand that the fraternization rule only targeted 'personal entanglements,' not NLRA-protected activity. The court, however, disagreed. Specifically, this rule stated: 'While on duty you must NOT ' fraternize on duty or off duty, date or become overly friendly with the client's employees or with coemployees.' The court analyzed the language by giving independent meaning to each and every word. As a result, the court rejected the NLRB's interpretation of the word 'fraternize,' which the Board had found to be synonymous with 'dating' and 'becoming overly friendly.' The court concluded that 'fraternize' must have some other meaning, separate and apart from the other words and phrases in the rule itself, otherwise the use of the word 'fraternize' would be superfluous. As the most common meaning of the word 'fraternize' is to associate or mingle on fraternal terms, the court held that the rule explicitly prohibited fraternal discussions of terms and conditions of employment. Therefore, the court held the rule to be in direct violation of the NLRA.

Practical Impact of Cintas And Guardsmark

These decisions serve as a reminder that the mere existence of a policy that is likely to chill protected activity ' whether explicitly or through reasonable interpretation ' can be deemed to be an unfair labor practice, even absent evidence of enforcement. Therefore, policies should be narrowly tailored so that employees cannot reasonably interpret those policies to prohibit discussing the terms and conditions of their employment.

Howard S. Lavin is the Chair of the Employment Law Practice Group and a Partner at Stroock & Stroock & Lavan LLP. Elizabeth E. DiMichele is a Special Counsel in Stroock's Employment Law Practice Group.