Spring 2014 Business Law Bulletin

In January 2014, the U.S. Supreme Court heard oral arguments in a historic case that tests the constitutional limits of the President’s power to make recess appointments to judgeships and key federal government jobs. The case involves recess appointments that President Obama made to the NLRB, an agency that has been markedly understaffed in recent years. If the Court limits the President’s power, thousands of NLRB decisions will be reopened for re-decision.

In the meantime, the Senate and the President have agreed on a package of new appointees to the NLRB, and the agency is operating with a full complement of five members for the first time in a decade. These new members, while not as controversial as the recess appointees, have predictably taken a very pro-union and pro-employee stance in their short time in office. For example:

When your company conducts internal investigations of harassment, discrimination or other employee complaints, do you ask employee witnesses to maintain confidentiality and to avoid influencing the testimony of other witnesses? Does your company’s employment application/employee handbook/policy manual provide employment is “at will” and that a contract of employment can only be created by or authorized by the CEO?

If your company uses arbitration agreements to avoid costly litigation of employment disputes, do those agreements limit or forbid “class action” claims? Does your company tell employees they have the right to use company computers and email to engage in union organizing?

If you answered “yes” to any of the first three questions or “no” to the last question, the “new” NLRB would like to challenge your policies and practices. These are only a few of the many new initiatives the NLRB is considering.

The NLRB’s position on these issues will likely be challenged in the courts. In one instance (class action waivers), the Federal Appeals Court in Dallas has already rejected the agency’s position, and the NLRB has stated its intention to take the case to the U.S. Supreme Court. On other issues, it seems likely that the courts will be hostile to the NLRB.

For example, when the courts eventually consider the NLRB’s ruling that employees have a protected statutory right to breach confidentiality and talk with each other (and thereby influence testimony) during an ongoing investigation, it will be interesting to hear how the NLRB defends its stance since the agency has always adamantly maintained that strict confidentiality must be observed by all participants when it investigates unfair labor practice complaints. This “we can do it but you can’t” approach is similar to the EEOC’s current attack against companies that use criminal background checks as part of the hiring process. So far, the EEOC has lost those cases, in part because the EEOC itself relies heavily on criminal background checks as part of its hiring process. The courts tend to catch the irony there.

You don’t want your company to be the test case for these new NLRB initiatives. You should review your handbooks and policy manuals to make an informed decision about whether to modify policies and practices to avoid challenges by the NLRB or to take a “wait and see” approach that has the potential for being the subject of enforcement action by the agency.

Chris Mitchell is a Shareholder in the firm’s Labor and Employment practice. He can be reached at 205-254-1160 or cmitchell@maynardcooper.com.