NLRB Gives Union Partial Victory in Challenge To Employee Handbook

Employee handbooks are now the preferred method of communicating company information and distributing policies required by employment laws. However, excessive "legalese" and overly broad restrictions on personal freedoms that often appear in handbooks may cause staff morale problems. Also, as a non-union employer recently discovered, a union interested in organizing an employer's workforce may attempt to use a comprehensive and thorough handbook against the employer in an organizing drive.

In Lafayette Park Hotel, 326 N.L.R.B. No. 69 (1998), Hotel Employees Local 2850 brought an unfair labor practices charge against the hotel. The union alleged that 7 of the 42 "unacceptable conduct" rules listed in the hotel's employee handbook had the effect of "interfering with, restraining, or coercing" hotel employees in violation of the National Labor Relations Act (NLRA) -- even though no employee had ever been disciplined under any of the seven rules. The seven rules prohibited:

1. Being uncooperative with supervisors, employees, guests, and/or regulatory agencies or otherwise engaging in conduct that does not support the hotel's goals and objectives;
2. Divulging hotel-private information to employees or other individuals or entities that are not authorized to receive that information;
3. Making false, vicious, profane or malicious statements toward or concerning the hotel or any of its employees;
4. Unlawful or improper conduct off the hotel's premises or during non-working hours which affects the employee's relationship with the job, fellow employees, supervisors or the hotel's reputation or good will in the community;
5. Using the restaurant or cocktail lounge for entertaining friends or guests without the approval of the department manager;
6. Fraternizing with hotel guests anywhere on hotel property;
7. Remaining on the premises after the completion of one's shift or returning to the hotel before the next scheduled shift.

By a majority vote of the five National Labor Relations Board (NLRB) members, Rule 3 was struck down, and the Board unanimously struck down Rule 7. However, two of the three Democratic appointees on the Board voted to strike down all seven of the rules. Rule 3 was invalidated because of the NLRB's prior rulings that employers can only prohibit "maliciously false" statements, not statements which are simply "false." Rule 7 failed scrutiny because no business reasons were given to justify denying off-duty employees entry to parking lots and other outside, non-working areas. Presumably, the Board would have upheld Rule 7 if the handbook had specifically excluded those areas from coverage. Concluding that Rules 3 and 7 would "reasonably tend to chill employees" in the exercise of organizing efforts, the NLRB ordered the hotel to remove those rules from the handbook.

The union argued that Rules 1, 4, and 5 could lead employees to assume that a goal of the hotel was to remain non-union. If employees supported union activity, the union argued, they could be punished under those rules. The Board majority dismissed those claims as "farfetched." The union further argued that Rule 2 would prohibit employees from discussing their wages and other working conditions, activities protected by the NLRA. The majority disagreed and concluded that the hotel had a legitimate interest in protecting guest information, supplier contacts, and trade secrets. Rule 6 also was found to be permissible.

Lafayette Park Hotel poses a dilemma for employers. In light of the potential for creating unintended contractual relationships and fodder for union organization campaigns, should employers continue to issue handbooks? Despite these potential problems, employers derive significant benefits from ensuring that employees receive notice of important policies required by federal laws (such as FMLA and sexual harassment policies) and that all employees are aware of the employer's expectations. We think that these benefits outweigh the potential problems, which often result from an employer's use of an "off the rack" handbook that contains information that is either inaccurate or too broad. Nevertheless, employers should realize that some policies may inadvertently violate federal labor laws. We encourage employers to periodically review handbooks to make sure that they do not create unwanted contracts or invite challenge from unions.