D.C. Circuit Finds Hyundai’s Workplace Policies Unlawful Under NLRA

In Hyundai America Shipping Agency v. N.L.R.B., No. 11-1351, slip op. (D.D.C. Nov. 6, 2015), the D.C. Circuit upheld several ofthe National Labor Relations Board’s (NLRB) findings regarding workplace rules on non-work activity, confidentiality and electronic communications. Section 7 of the National Labor Relations Act (NLRA) prohibits the restriction of workers’ rights to form or join labor organizations, bargain collectively and engage in other concerted activities. The Court and the Board’s review of Hyundai’s workplace rules focused on whether the rules violate those Section 7 rights.

The D.C. Circuit found that three work rules violated Section 7 but upheld one rule as lawful.

First, the Court invalidated Hyundai’s oral rule that prohibited employees from discussing the subjects of investigations. Hyundai argued that the U.S. Equal Employment Opportunity Commission (EEOC) recommends confidentiality in sexual harassment investigations. The Court was not persuaded by Hyundai’s argument. Rather the Court agreed with the NLRB’s finding that because the employer’s rule applied to all investigations and was not limited to EEOC investigations, the Employer’s argument did not justify the limits placed on employees’ right to discuss their employment.

Second, the Court found invalid the Hyundai employee handbook rule limiting employees to only disclose information or messages from company electronic systems to “authorized persons.” The Court reasoned that an employee could interpret the rule as restricting their ability to share information about the terms and conditions of employment. Additionally, the Court found that the rule was not limited to protecting only confidential information and as such, it was unlawfully restrictive.

Third, the Court found that the workplace provision allowing discipline up to termination for “[p]erforming activities other than Company work during working hours” was unlawful. The Court distinguished between rules restricting union activity during working hours, including breaks - which are presumptively unlawful rules - and restrictions of activity during active working time, which are permissible. The rule was unlawful because it restricted activity during work hours in violation of Section 7.

Last, the Court upheld one handbook provision as lawful that encouraged employees to report workplace complaints to their supervisors or Human Resources. The Court found that the provision’s language was not mandatory, did not provide for discipline for discussing complaints with co-workers and did not preclude other alternatives. In sum, the Court reasoned that the rule merely encouraged employees to pursue a particular avenue when reporting a complaint. Consequently, the Court found that employees would not interpret the provision as prohibiting their discussion of complaints with others outside of management.

The Court's decision shows the need to carefully review both oral and written workplace rules and policies, even if those that do not on explicitly relate to or mention union-organizing activity, to ensure that they do not run afoul the protections of the NLRA.

We will continue to report on the NLRB and the Courts’ review of workplace policies. For any questions, please contact your labor law counsel.

By Caroline Cohen | November 25, 2015

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