OFFICE OF THE GENERAL COUNSEL MEMORANDUM GC 15- 04 March 18, 2015

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OFFICE OF THE GENERAL COUNSELMEMORANDUM GC 15- 04March 18, 2015TO:All Regional Directors, Officers-in-Charge,and Resident OfficersFROM:Richard F. Griffin, Jr., General CounselSUBJECT: Report of the General CounselConcerning Employer RulesAttached is a report from the General Counsel concerning recent employerrule cases.Attachmentcc: NLRBURelease to the PublicMEMORANDUM GC 15-04

2Report of the General CounselDuring my term as General Counsel, I have endeavored to keep the labormanagement bar fully aware of the activities of my Office. As part of this goal, Icontinue the practice of issuing periodic reports of cases raising significant legal orpolicy issues. This report presents recent case developments arising in the contextof employee handbook rules. Although I believe that most employers do not drafttheir employee handbooks with the object of prohibiting or restricting conductprotected by the National Labor Relations Act, the law does not allow even wellintentioned rules that would inhibit employees from engaging in activities protectedby the Act. Moreover, the Office of the General Counsel continues to receivemeritorious charges alleging unlawful handbook rules. I am publishing this reportto offer guidance on my views of this evolving area of labor law, with the hope thatit will help employers to review their handbooks and other rules, and conform them,if necessary, to ensure that they are lawful.Under the Board's decision in Lutheran Heritage Village-Livonia, 343 NLRB646 (2004), the mere maintenance of a work rule may violate Section 8(a)(1) of theAct if the rule has a chilling effect on employees' Section 7 activity. The mostobvious way a rule would violate Section 8(a)(1) is by explicitly restricting protectedconcerted activity; by banning union activity, for example. Even if a rule does notexplicitly prohibit Section 7 activity, however, it will still be found unlawful if 1)employees would reasonably construe the rule's language to prohibit Section 7activity; 2) the rule was promulgated in response to union or other Section 7activity; or 3) the rule was actually applied to restrict the exercise of Section 7rights.In our experience, the vast majority of violations are found under the firstprong of the Lutheran Heritage test. The Board has issued a number of decisionsinterpreting whether "employees would reasonably construe" employer rules toprohibit Section 7 activity, finding various rules to be unlawful under thatstandard. I have had conversations with both labor- and management-sidepractitioners, who have asked for guidance regarding handbook rules that aredeemed acceptable under this prong of the Board's test. Thus, I am issuing thisreport.This report is divided into two parts. First, the report will compare rules wefound unlawful with rules we found lawful and explain our reasoning. This sectionwill focus on the types of rules that are frequently at issue before us, such asconfidentiality rules, professionalism rules, anti-harassment rules, trademark rules,photography/recording rules, and media contact rules. Second, the report willdiscuss handbook rules from a recently settled unfair labor practice charge againstWendy's International LLC. The settlement was negotiated following our initial

3determination that several of Wendy's handbook rules were facially unlawful. Thereport sets forth Wendy's rules that we initially found unlawful with anexplanation, along with Wendy's modified rules, adopted pursuant to a informal,bilateral Board settlement agreement, which the Office of the General Counsel doesnot believe violate the Act.I hope that this report, with its specific examples of lawful and unlawfulhandbook policies and rules, will be of assistance to labor law practitioners andhuman resource professionals.Richard F. Griffin, Jr.General Counsel

4Part 1: Examples of Lawful and Unlawful Handbook RulesA.Employer Handbook Rules Regarding ConfidentialityEmployees have a Section 7 right to discuss wages, hours, and other termsand conditions of employment with fellow employees, as well as with nonemployees,such as union representatives. Thus, an employer's confidentiality policy that eitherspecifically prohibits employee discussions of terms and conditions of employment—such as wages, hours, or workplace complaints—or that employees wouldreasonably understand to prohibit such discussions, violates the Act. Similarly, aconfidentiality rule that broadly encompasses "employee" or "personnel"information, without further clarification, will reasonably be construed byemployees to restrict Section 7-protected communications. See Flamingo-HiltonLaughlin, 330 NLRB 287, 288 n.3, 291-92 (1999).In contrast, broad prohibitions on disclosing "confidential" information arelawful so long as they do not reference information regarding employees or anythingthat would reasonably be considered a term or condition of employment, becauseemployers have a substantial and legitimate interest in maintaining the privacy ofcertain business information. See Lafayette Park Hotel, 326 NLRB 824, 826 (1998),enforced, 203 F.3d 52 (D.C. Cir. 1999); Super K-Mart, 330 NLRB 263, 263 (1999).Furthermore, an otherwise unlawful confidentiality rule will be found lawful if,when viewed in context, employees would not reasonably understand the rule toprohibit Section 7 protected activity.Unlawful Confidentiality RulesWe found the following rules to be unlawful because they restrict disclosureof employee information and therefore are unlawfully overbroad: Do not discuss "customer or employee information" outside of work,including "phone numbers [and] addresses."In the above rule, in addition to the overbroad reference to "employee information,"the blanket ban on discussing employee contact information, without regard for howemployees obtain that information, is also facially unlawful. "You must not disclose proprietary or confidential information about[the Employer, or] other associates (if the proprietary or confidential

5information relating to [the Employer's] associates was obtained inviolation of law or lawful Company policy)."Although this rule's restriction on disclosing information about "other associates" isnot a blanket ban, it is nonetheless unlawfully overbroad because a reasonableemployee would not understand how the employer determines what constitutes a"lawful Company policy." "Never publish or disclose [the Employer's] or another's confidentialor other proprietary information. Never publish or report onconversations that are meant to be private or internal to [theEmployer]."While an employer may clearly ban disclosure of its own confidential information, abroad reference to "another's" information, without further clarification, as in theabove rule, would reasonably be interpreted to include other employees' wages andother terms and conditions of employment.We determined that the following confidentiality rules were facially unlawful,even though they did not explicitly reference terms and conditions of employment oremployee information, because the rules contained broad restrictions and did notclarify, in express language or contextually, that they did not restrict Section 7communications: Prohibiting employees from "[d]isclosing . details about the[Employer]." "Sharing of [overheard conversations at the work site] with your coworkers, the public, or anyone outside of your immediate workgroup is strictly prohibited." "Discuss work matters only with other [Employer] employees whohave a specific business reason to know or have access to suchinformation. . Do not discuss work matters in public places." "[I]f something is not public information, you must not share it."Because the rule directly above bans discussion of all non-public information, weconcluded that employees would reasonably understand it to encompass such nonpublic information as employee wages, benefits, and other terms and conditions ofemployment. Confidential Information is: "All information in which its [sic] loss,undue use or unauthorized disclosure could adversely affect the[Employer's] interests, image and reputation or compromisepersonal and private information of its members."

6Employees not only have a Section 7 right to protest their wages and workingconditions, but also have a right to share information in support of thosecomplaints. This rule would reasonably lead employees to believe that they cannotdisclose that kind of information because it might adversely affect the employer'sinterest, image, or reputation.Lawful Confidentiality RulesWe concluded that the following rules that prohibit disclosure of confidentialinformation were facially lawful because: 1) they do not reference informationregarding employees or employee terms and conditions of employment, 2) althoughthey use the general term "confidential," they do not define it in an overbroadmanner, and 3) they do not otherwise contain language that would reasonably beconstrued to prohibit Section 7 communications: No unauthorized disclosure of "business 'secrets' or otherconfidential information." "Misuse or unauthorized disclosure of confidential information nototherwise available to persons or firms outside [Employer] is causefor disciplinary action, including termination." "Do not disclose confidential financial data, or other non-publicproprietary company information. Do not share confidentialinformation regarding business partners, vendors or customers."Finally, even when a confidentiality policy contains overly broad language,the rule will be found lawful if, when viewed in context, employees would notreasonably understand the rule to prohibit Section 7-protected activity. Thefollowing confidentiality rule, which we found lawful based on a contextual analysis,well illustrates this principle: Prohibition on disclosure of all "information acquired in the courseof one's work."This rule uses expansive language that, when read in isolation, would reasonably beread to define employee wages and benefits as confidential information. However, inthat case, the rule was nested among rules relating to conflicts of interest andcompliance with SEC regulations and state and federal laws. Thus, we determinedthat employees would reasonably understand the information described asencompassing customer credit cards, contracts, and trade secrets, and not Section 7protected activity.

7B.Employer Handbook Rules Regarding Employee Conduct toward theCompany and SupervisorsEmployees also have the Section 7 right to criticize or protest theiremployer's labor policies or treatment of employees. Thus, rules that can reasonablybe read to prohibit protected concerted criticism of the employer will be foundunlawfully overbroad. For instance, a rule that prohibits employees from engagingin. "disrespectful," "negative," "inappropriate," or "rude" conduct towards theemployer or management, absent sufficient clarification or context, will usually befound unlawful. See Casino San Pablo, 361 NLRB No. 148, slip op. at 3 (Dec. 16,2014). Moreover, employee criticism of an employer will not lose the Act's protectionsimply because the criticism is false or defamatory, so a rule that bans falsestatements will be found unlawfully overbroad unless it specifies that onlymaliciously false statements are prohibited. Id. at 4. On the other hand, a rule thatrequires employees to be respectful and professional to coworkers, clients, orcompetitors, but not the employer or management, will generally be found lawful,because employers have a legitimate business interest in having employees actprofessionally and courteously in their dealings with coworkers, customers,employer business partners, and other third parties. In addition, rules prohibitingconduct that amounts to insubordination would also not be construed as limitingprotected activities. See Copper River of Boiling Springs, LLC, 360 NLRB No. 60(Feb. 28, 2014). Also, rules that employees would reasonably understand to prohibitinsubordinate conduct have been found lawful.Unlawful Rules Regulating Employee Conduct towards the EmployerWe found the following rules unlawfully overbroad since employeesreasonably would construe them to ban protected criticism or protests regardingtheir supervisors, management, or the employer in general. "[Me respectful to the company, other employees, customers,partners, and competitors." Do "not make fun of, denigrate, or defame your co-workers,customers, franchisees, suppliers, the Company, or our competitors." "Be respectful of others and the Company." No "[d]efamatory, libelous, slanderous or discriminatory commentsabout [the Company], its customers and/or competitors, itsemployees or management.While the following two rules ban "insubordination," they also ban conduct thatdoes not rise to the level of insubordination, which reasonably would be understood

8as including protected concerted activity. Accordingly, we found these rules to beunlawful. "Disrespectful conduct or insubordination, including, but not limitedto, refusing to follow orders from a supervisor or a designatedrepresentative." "Chronic resistance to proper work-related orders or discipline, eventhough not overt insubordination" will result in discipline.In addition, employees' right to criticize an employer's labor policies andtreatment of employees includes the right to do so in a public forum. See QuickenLoans, Inc., 361 NLRB No. 94, slip op. at 1 n.1 (Nov. 3, 2014). Accordingly, wedetermined that the following rules were unlawfully overbroad because theyreasonably would be read to require employees to refrain from criticizing theemployer in public. "Refrain from any action that would harm persons or property orcause damage to the Company's business or reputation." "[I]t is important that employees practice caution and discretionwhen posting content [on social media] that could affect [theEmployer's] business operation or reputation." Do not make "[s]tatements "that damage the company or thecompany's reputation or that disrupt or damage the company'sbusiness relationships." "Never engage in behavior that would undermine the reputation of[the Employer], your peers or yourself."With regard to these examples, we recognize that the Act does not protect employeeconduct aimed at disparaging an employer's product, as opposed to conduct criticalof an employer's labor policies or working conditions. These rules, however,contained insufficient context or examples to indicate that they were aimed only atunprotected conduct.Lawful Rules Regulating Employee Conduct towards the EmployerIn contrast, when an employer's handbook simply requires employees to berespectful to customers, competitors, and the like, but does not mention thecompany or its management, employees reasonably would not believe that such arule prohibits Section 7-protected criticism of the company. The following rules,which we have found lawful, are illustrative:

9 No "rudeness or unprofessional behavior toward a customer, oranyone in contact with" the company. "Employees will not be discourteous or disrespectful to a customeror any member of the public while in the course and scope of[company] business."Similarly, rules requiring employees to cooperate with each other and theemployer in the performance of their work also usually do not implicate Section 7rights. See Copper River of Boiling Springs, LLC, 360 NLRB No. 60, slip op. at 1(Feb. 28, 2014). Thus, we found the following rule was lawful because employeeswould reasonably understand that it is stating the employer's legitimateexpectation that employees work together in an atmosphere of civility, and that it isnot prohibiting Section 7 activity: "Each employee is expected to work in a cooperative manner withmanagement/supervision, coworkers, customers and vendors."And we concluded that the following rule was lawful, because employees wouldreasonably interpret it to apply to employer investigations of workplace misconductrather than investigations of unfair labor practices or preparations for arbitration,when read in context with other provisions: "Each employee is expected to abide by Company policies and tocooperate fully in any investigation that the Company mayundertake."As previously discussed, the Board has made clear that it will not read rulesin isolation. Even when a rule includes phrases or words that, alone, reasonablywould be interpreted to ban protected criticism of the employer, if the contextmakes plain that only serious misconduct is banned, the rule will be found lawful.See Tradesmen International, 338 NLRB 460, 460-62 (2002). For instance, we foundthe following rule lawful based on a contextual analysis: "Being insubordinate, threatening, intimidating, disrespectful orassaulting a manager/supervisor, coworker, customer or vendor willresult in" discipline.Although a ban on being "disrespectful" to management, by itself, would ordinarilybe found to unlawfully chill Section 7 criticism of the employer, the term here iscontained in a larger provision that is clearly focused on serious misconduct, likeinsubordination, threats, and assault. Viewed in that context, we concluded thatemployees would not reasonably believe this rule to ban protected criticism.

- 10 C.Employer Handbook Rules Regulating Conduct Towards FellowEmployeesIn addition to employees' Section 7 rights to publicly discuss their terms andconditions of employment and to criticize their employer's labor policies, employeesalso have a right under the Act to argue and debate with each other about unions,management, and their terms and conditions of employment. These discussions canbecome contentious, but as the Supreme Court has noted, protected concertedspeech will not lose its protection even if it includes "intemperate, abusive andinaccurate statements." Linn v. United Plant Guards, 383 U.S. 53 (1966). Thus,when an employer bans "negative" or "inappropriate" discussions among itsemployees, without further clarification, employees reasonably will read those rulesto prohibit discussions and interactions that are protected under Section 7. SeeTriple Play Sports Bar & Grille, 361 NLRB No. 31, slip op. at 7 (Aug. 22, 2014);Hills & Dales General Hospital, 360 NLRB No. 70, slip op. at 1 (Apr. 1, 2014). Forexample, although employers have a legitimate and substantial interest inmaintaining a harassment-free workplace, anti-harassment rules cannot be sobroad that employees would reasonably read them as prohibiting vigorous debate orintemperate comments regarding Section 7-protected subjects.Unlawful Employee-Employee Conduct RulesWe concluded that the following rules were unlawfully overbroad becauseemployees would reasonably construe them to restrict protected discussions withtheir coworkers. "[D]on't pick fights" online.We found the above rule unlawful because its broad and ambiguous language wouldreasonably be construed to encompass protected heated discussion amongemployees regarding unionization, the employer's labor policies, or the employer'streatment of employees. Do not make "insulting, embarrassing, hurtful or abusive commentsabout other company employees online," and "avoid the use ofoffensive, derogatory, or prejudicial comments."Because debate about unionization and other protected concerted activity is oftencontentious and controversial, employees would reasonably read a rule that bans"offensive," "derogatory," "insulting," or "embarrassing" comments as limiting theirability to honestly discuss such subjects. These terms also would reasonably beconstrued to limit protected criticism of supervisors and managers, since they arealso "company employees."

"[S]how proper consideration for others' privacy and for topics thatmay be considered objectionable or inflammatory, such as politicsand religion."This rule was found unlawful because Section 7 protects communications aboutpolitical matters, e.g., proposed right-to-work legislation. Its restriction oncommunications regarding controversial political matters, without clarifyingcontext or examples, would be reasonably construed to cover these kinds of Section7 communications. Indeed, discussion of unionization would also be chilled by sucha rule because it can be an inflammatory topic similar to politics and religion. Do not send "unwanted, offensive, or inappropriate" e-mails.The above rule is similarly vague and overbroad, in the absence of context orexamples to clarify that it does not encompass Section 7 communications. "Material that is fraudulent, harassing, embarrassing, sexuallyexplicit, profane, obscene, intimidating, defamatory, or otherwiseunlawful or inappropriate may not be sent by e-mail. ."We found the above rule unlawful because several of its terms are ambiguous as totheir application to Section 7 activity—"embarrassing," "defamatory," and"otherwise . . . inappropriate." We further concluded that, viewed in context withsuch language, employees would reasonably construe even the term "intimidating"as covering Section 7 conduct.Lawful Employee-Employee Conduct RulesOn the other hand, when an employer's professionalism rule simply requiresemployees to be respectful to customers or competitors, or directs employees not toengage in unprofessional conduct, and does not mention the company or itsmanagement, employees would not reasonably believe that such a rule prohibitsSection 7-protected criticism of the company. Accordingly, we concluded that thefollowing rules were lawful: "Making inappropriate gestures, including visual staring." Any logos or graphics worn by employees "must not reflect any formof violent, discriminatory, abusive, offensive, demeaning, orotherwise unprofessional message." "[T]hreatening, intimidating, coercing, or otherwise interfering withthe job performance of fellow employees or visitors." No "harassment of employees, patients or facility visitors."

- 12 - No "use of racial slurs, derogatory comments, or insults."With respect to the last example, we recognized that a blanket ban on "derogatorycomments," by itself, would reasonably be read to restrict protected criticism of theemployer. However, because this rule was in a section of the handbook that dealtexclusively with unlawful harassment and discrimination, employees reasonablywould read it in context as prohibiting those kinds of unprotected comments towardcoworkers, rather than protected criticism of the employer.D.Employer Handbook Rules Regarding Employee Interaction with ThirdPartiesAnother right employees have under Section 7 is the right to communicatewith the news media, government agencies, and other third parties about wages,benefits, and other terms and conditions of employment. Handbook rules thatreasonably would be read to restrict such communications are unlawfullyoverbroad. See Trump Marina Associates, 354 NLRB 1027, 1027 n.2 (2009),incorporated by reference, 355 NLRB 585 (2010), enforced mem., 435 F. App'x 1(D.C. Cir. 2011). The most frequent offenders in this category are company mediapolicies. While employers may lawfully control who makes official statements forthe company, they must be careful to ensure that their rules would not reasonablybe read to ban employees from speaking to the media or other third parties on theirown (or other employees') behalf.Unlawful Rules Regulating Third Party CommunicationsWe found the following rules were unlawfully overbroad because employeesreasonably would read them to ban protected communications with the media. Employees are not "authorized to speak to any representatives ofthe print and/or electronic media about company matters" unlessdesignated to do so by HR, and must refer all media inquiries to thecompany media hotline.We determined that the above rule was unlawful because employees wouldreasonably construe the phrase "company matters" to encompass employmentconcerns and labor relations, and there was no limiting language or other context inthe rule to clarify that the rule applied only to those speaking as official companyrepresentatives. "[A]ssociates are not authorized to answer questions from the newsmedia. . . When approached for information, you should refer theperson to [the Employer's] Media Relations Department."

- 13 "[A]ll inquiries from the media must be referred to the Director ofOperations in the corporate office, no exceptions."These two rules contain blanket restrictions on employees' responses to mediainquiries. We therefore concluded that employees would reasonably understand thatthey apply to all media contacts, not only inquiries seeking the employers' officialpositions.In addition, we found the following rule to be unlawfully overbroad becauseemployees reasonably would read it to limit protected communications withgovernment agencies. "If you are contacted by any government agency you should contactthe Law Department immediately for assistance."Although we recognize an employer's right to present its own position regarding thesubject of a government inquiry, this rule contains a broader restriction. Employeeswould reasonably believe that they may not speak to a government agency withoutmanagement approval, or even provide information in response to a Boardinvestigation.Lawful Rules Regulating Employee Communications with Outside PartiesIn contrast, we found the following media contact rules to be lawful becauseemployees reasonably would interpret them to mean that employees should notspeak on behalf of the company, not that employees cannot speak to outsiders ontheir own (or other employees') behalf. "The company strives to anticipate and manage crisis situations inorder to reduce disruption to our employees and to maintain ourreputation as a high quality company. To best serve these objectives,the company will respond to the news media in a timely andprofessional manner only through the designated spokespersons."We determined that this rule was lawful because it specifically referred to employeecontact with the media regarding non-Section 7 related matters, such as crisissituations; sought to ensure a consistent company response or message regardingthose matters; and was not a blanket prohibition against all contact with the media.Accordingly, we concluded that employees would not reasonably interpret this ruleas interfering with Section 7 communications. "Events may occur at our stores that will draw immediate attentionfrom the news media. It is imperative that one person speaks for theCompany to deliver an appropriate message and to avoid givingmisinformation in any media inquiry. VVhile reporters frequentlyshop as customers and may ask questions about a matter, good

- 14 -reporters identify themselves prior to asking questions. Every . . .employee is expected to adhere to the following media policy: . . 2.Answer all media/reporter questions like this: 'I am not authorized tocomment for [the Employer] (or I don't have the information youwant). Let me have our public affairs office contact you."We concluded that the prefatory language in this rule would cause employees toreasonably construe the rule as an attempt to control the company's message,rather than to restrict Section 7 communications to the media. Further, therequired responses to media inquiries would be non-sequiturs in the context of adiscussion about terms and conditions of employment or protected criticism of thecompany. Accordingly, we found that employees reasonably would not read this ruleto restrict conversations with the news media about protected concerted activities.E.Employer Handbook Rules Restricting Use of Company Logos,Copyrights, and TrademarksWe have also reviewed handbook rules that restrict employee use of companylogos, copyrights, or trademarks. Though copyright holders have a clear interest inprotecting their intellectual property, handbook rules cannot prohibit employees'fair protected use of that property. See Pepsi-Cola Bottling Co., 301 NLRB 1008,1019-20 (1991), enforced mem., 953 F.2d 638 (4th Cir. 1992). For instance, acompany's name and logo will usually be protected by intellectual property laws,but employees have a right to use the name and logo on picket signs, leaflets, andother protest material. Employer proprietary interests are not implicated byemployees' non-commercial use of a name, logo, or other trademark to identify theemployer in the course of Section 7 activity. Thus, a broad ban on such use withoutany clarification will generally be found unlawfully overbroad.Unlawful Rules Banning Employee Use of Logos, Copyrights, or TrademarksWe found that the following rules were unlawful because they contain broadrestrictions that employees would reasonably read to ban fair use of the employer'sintellectual property in the course of protected concerted activity. Do "not use any Company logos, trademarks, graphics, oradvertising materials" in social media. Do not use "other people's property," such as trademarks, withoutpermission in social media. "Use of [the Employer's] name, address or other information in yourpersonal profile [is banned]. . . In addition, it is prohibited to use[the Employer's] logos, trademarks or any other copyrightedmaterial."

- 15 - "Company logos and trademarks may not be used without writtenconsent ."Lawful Rules Protecting Employer Logos, Copyrights, and TrademarksWe found that the following rules were lawful. Unlike the prior examples,which broadly ban employee use of trademarked or copyrighted material, theserules simply require employees to respect such laws, permitting fair use. "Respect all copyright and other intellectual property laws. For [theEmployer's] protection as well as your own, it is critical that youshow proper respect for the laws governing copyright, fair use ofcopyrighted material owned by others, trademarks and otherintellectual property, including [the Employer's] own copyrights,trademarks and brands." "DO respect the laws regarding

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