Another employee handbook did not measure up to the National Labor Relations Board’s (NLRB) scrutiny after it ruled that an employee handbook provision prohibiting employees from having a “conflict of interest” with the employer was facially overbroad and unlawful on its face. See Remington Lodging & Hospitality, LLC, 2015 BL 194198, 362 N.L.R.B. No. 123 (6/18/15).
Specifically, on June 18, 2015, the Remington Lodging & Hospitality decision, the NLRB concluded that hotel employees would reasonably interpret the conflict of interest rule as limiting their exercise of rights under the National Labor Relations Act (NLRA). Accordingly, the employee handbook provision was overbroad and illegal on its face because it violated NLRA.
Two of the three members of the NLRB panel said the rule interfered with employee rights in violation of the NLRA because employees would reasonably believe it would apply to NLRA-protected activities, in part because of other violations of the NLRA by the employer:
Particularly when viewed in the context of the [Employer’s] other unlawfully overbroad rules employees would reasonably fear that the rule prohibits any conduct the Respondent may consider to be detrimental to its image or reputation or to present a ‘conflict’ with its interests, such as informational picketing, strikes, or other economic pressure.
Under applicable NLRB decisions, a rule is unlawful if it explicitly restricts Section 7 activity or if there is a showing that (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.
As we previously reported, the NLRB has aggressively pursued employer violations arising out of overbroad or even improperly drafted employee handbooks. See Employer Charged with Unfair Labor Practice Because Employee Manual and Agreements Were Unlawful and Employee Manuals Need Spring Cleaning Thanks to the NLRB. But this latest ruling is likely to be of significant concern to employers for a number of reasons. This is because employers have a legitimate interest in preventing employees from maintaining a conflict of interest, whether they compete directly against the employer, exploit sensitive employer information for personal gain, or have a fiduciary interest that runs counter to the employer’s enterprise. Accordingly, the sort of conflict of interest provision that was found to be unlawful in the Remington case is commonly found in many employment handbooks and agreements.
For this reason, it is critical for employers and human resource professionals to carefully review and update their existing employee manuals and policies to avoid a later finding that the employee policies inadvertently violate the NLRA. And this recommendation applies to both union and non-union employers as the applicable NLRA rights extend to employees in both situations. In other words, even if your employees are not in a union, those employees still enjoy rights under the NLRA.
For more information about complying with federal or Michigan employment law, including implementing HR best practices and drafting employee manuals, contact employment attorney Jason Shinn. Since 2001, Mr. Shinn has provided comprehensive legal services in the area of employment law compliance. He routinely works with start-up and growing businesses to provide employment law and overall general counsel services for the company.