Q3 Employment Law Updates: Enforcement Actions Bring Much for Employers to Consider

The third quarter of 2023 has been pretty exciting as far as employment lawyers are concerned. Substantial regulations have been proposed and the pressure from federal agencies continues to rise. We will talk about some of the most influential changes over the last three months which will be of interest to all employers.

NLRB Comes for Employee Handbooks, Confusing Employers, and Itself

On August 2, 2023, the National Labor Relations Board (“NLRB”) adopted a new[1] standard for evaluating whether employee handbook policies violate the National Labor Relations Act (“NLRA”). Under the new standard, the NLRB will determine the lawfulness of a policy by determining whether, from an employee’s perspective, the policy could reasonably be interpreted to have a limiting effect on protected activities. This new standard tosses aside the prior test which had allowed for recognition of an employer’s legitimate business interests in maintaining workplace rules, and going even further, completely disregards the employer’s intent in the promulgation of the rule.

Adding to the uncertainty, this new standard has already been applied to oral communications between supervisors and employees.[2] In September, the Division of Judges ruled that it was a violation of the NLRA for an employer to orally request an employee not discuss a special gas reimbursement that the supervisor provided at the employee’s request. While the Division’s finding was not surprising, the more concerning issue was that the Region attempted to bring an unfair labor practice charge based on the presumption that this one communication was in effect a companywide rule prohibiting all employees from discussing wages. Understandably, the Division did not rule in favor of the Region on that portion of the charge. In another example, the NLRB struck at Starbucks again, finding an employer policy unlawful for stating that employees should communicate in a professional and respectful manner.[3] To add to the confusion, a month later, the Division of Judges found that a policy which prohibited immoral or indecent conduct or unlawful or improper conduct on or off duty to be lawful.[4]

As is clear from decisions following the NLRB’s decision in Stericycle, employers cannot expect a uniform response to such a vague standard and must be careful and diligent in the crafting of their workplace policies (as well as oral communications). When possible, employers should take advantage of the potential affirmative defense to Stericycle claims by drafting their workplace rules as narrowly and precise as possible.

No More Right to Vote From the NLRB

In a decision which upended over 50 years of precedent, the NLRB created an easier pathway to unionization for employees.[5] Under the new Cemex standard, if a union demands recognition as the exclusive bargaining unit for employees by claiming that they are supported by a majority of employees, an employer must promptly file a petition to test the union’s majority status or the appropriateness of the proposed unit or recognize the union. Employers who fail to do so will now be in violation of the Act even though no petition has been filed by the union seeking to organize. In addition to these new standards, even in situations where an employer petitions for an election, if that employer is found to have committed a single unfair labor practice, even a minute policy violation under the Stericycle standard discussed above, the Board could immediately set the election aside and require the employer to recognize and bargain with the union. This includes for those work rules that simply exist even if no one has ever read them and one-time remarks as discussed above.

NLRB Takes on Noncompetes

The NLRB has taken its first swing at noncompete agreements. On September 1, 2023, the NLRB Region 9 office filed a complaint alleging that a company’s use of a noncompete (as well as other contractual provisions) in an employment agreement is in and of itself an unfair labor practice. While we won’t delve into the specific issues with the drafting of the employment agreement at issue in the case, we do want to draw attention to the fact that the NLRB is now pursuing these charges and that in what appears to be the first charge of its kind, the employees in question here were not union affiliated in any way. While this matter will be heard by an Administrative Law Judge in November, it will likely find its way to the Board, and then eventually up to the federal circuit where we will see how well the General Counsel’s memorandum holds up.

OSHA Teams Up With NLRB

The Occupational Health and Safety Administration (OSHA) has published a proposed Rule seeking to reestablish an Obama era policy (formerly known as the “Fairfax Memo”) allowing third parties to be present during “walkaround inspections.” While interpretation over OSHA’s authority to allow third parties to attend walkaround inspections has shifted in the past, the Obama era policy was ruled to be inconsistent with the OSH Act. As a result, this time OSHA has promulgated a proposed Rule for review which specifically permits a third-party representative authorized by employees to accompany OSHA on the walkaround inspection. This is considered by many to be a boon to unions who will likely see it as an avenue to demonstrate their worth to non-unionized employees when acting as the third-party representative.

DOL Proposes Higher Salary for Exempt Employees

The U.S. Department of Labor (“DOL”) has proposed new regulations that would increase the salary threshold overtime exemptions under the Fair Labor Standards Act (“FLSA”). Currently, employees with duties that satisfy an exemption under the FLSA must in most cases earn at least $684 a week or qualify as a highly compensated employee by earning at least $107,432. The proposed regulations would raise these levels to $1,059 per week and $143,988 for highly compensated employees. The DOL projects that this rulemaking would entitle approximately 3.6 million employees to overtime at current salary levels. The proposed rulemaking is currently open for public comment until November 7, 2023.

EEOC Guidance

On September 29, 2023, the Equal Opportunity Commission (EEOC) issued proposed guidance on workplace harassment which would supersede older guidance and compliance manuals from 1999 and prior. The guidance was proposed in part as a result of the work of the #MeToo movement and in part as a result of the EEOC’s data collection which demonstrated the prevalence of harassment in charges filed with the EEOC (approximately 35%). The guidance also addresses harassment based upon gender identity such as the refusal to use an individual’s preferred pronouns or improper communications about “traditional” gender-based archetypes and stereotypes. The guidance goes on to discuss covered bases of legal protected characteristics, virtual harassment, and employer duties and defenses.

DOJ Focuses on No-Poach Agreements

Over the last few years, the Department of Justice (“DOJ”) has been pursuing a number of cases against employers for the use of no-poach agreements with employees (aka blackballing). In its pursuit, the DOJ has gone after some large names, most recently McDonald’s. As with other cases, McDonald’s initially emerged victorious, but this victory did not last. Upon appeal, the Seventh Circuit reversed the decision and remanded the matter for further review. Employers should be mindful that the DOJ and state Attorneys General have increased their scrutiny of no-poach agreements over the last few years and this scrutiny looks to continue.

Conclusion

Given these changes and the other items mentioned in this article, it is definitely worth a look at current handbooks, policies, and any employment agreements or contracts for up-to-date compliance. These items need to be a priority for employers because of the number of federal agencies stepping up their enforcement of such rules. Ignorance of the law is never an excuse, even when rules are changing rapidly.

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[1] New at the NLRB is relative. Given the political nature of the agency standards shift frequently.

[2] Pro Residential Servs., Inc. & Gilbert Cuhen, an Individual., No. JD(SF)-28-23, 2023 WL 6379678 (Sept. 29, 2023)

[3] Starbucks Corp. & Workers United a/w Serv. Emps. Int’l Union, No. JD-50-23, 2023 WL 5140070 (Aug. 10, 2023)

[4] The Am. Bottling Co. d/b/a Keurig Dr. Pepper & Juan Gracia, an Individual, No. 13-CA-320094, 2023 WL 6379681 (Sept. 29, 2023).

[5] Cemex Constr. Materials Pac., LLC, 372 NLRB No. 130 (Aug. 25, 2023)                         .