Employment Law Daily Upholding NLRB, 1st Circuit finds dealership revised unlawful policies but failed to repudiate them
Tuesday, June 21, 2016

Upholding NLRB, 1st Circuit finds dealership revised unlawful policies but failed to repudiate them

By Lisa Milam-Perez, J.D. A Massachusetts auto dealership failed to properly repudiate its unlawful workplace policies, even though it revised the offending provisions—in cooperation with an NLRB regional office—so that they would pass muster under the Act, the First Circuit held in a lengthy opinion addressing the Board’s repudiation jurisprudence. Concluding that the NLRB’s holdings were supported by substantial evidence and its reasoning was not arbitrary and capricious, the First Circuit also held the Board properly found the dealership’s dress code, which banned pins, insignia, and "message clothing" in the workplace, violated the NLRA, even in its revised form. The majority was not convinced that the dealership established there were special circumstances to justify its ban on employees wearing pins. However, Judge Stahl dissented on this point, offering a mini-treatise on the caselaw governing employer dress codes (Boch Imports, dba Boch Honda v. NLRB, June 17, 2016, Barron, D.). Invalid provisions revised. A year after the dealership implemented its 2010 employee handbook, the local Machinists union charged that numerous of its provisions were unlawful and interfered with the union’s organizing efforts. The dealership bargained with the union over possible changes to its handbook but, in the meantime, the union filed unfair labor practice charges. Shortly thereafter, the union was decertified, ending the negotiations. But the dealership continued to discuss possible revisions with the Board regional office, engaging, in fact, in a line-by-line review and revision in cooperation with the agency. The Board filed a formal complaint nonetheless, based on the union’s earlier charge. Specifically, it challenged the employer’s policies on social media, confidential and proprietary information, discourtesy, inquiries concerning employees, solicitation and distribution, and dress code and personal hygiene (the latter of which restricted employees from wearing pins, insignias, and message clothing—and which figured prominently here). Revised policies. Before the Board even made a ruling on the complaint, the dealership revised the offending policies and distributed those revisions to employees. But in a revised complaint, the Board still contended the employer violated the Act by having maintained those policies while it did (including the dress ban provision, amended in 2013). The administrative law judge agreed with the employer that challenges to the 2010 policies were moot in light of the policy revisions—and that "it would not effectuate the policies of the [NLRA] to spend time on" inoperative handbook provisions—and informed the employer that the focus would be on the 2013 dress ban. This discussion took place during a telephone hearing at which the General Counsel stipulated that, except for the amended dress ban, the 2010 policies, as revised, were lawful under the NLRA. ALJ ruling. But the Board’s brief then argued that the challenge to the now-lifeless policies was not moot, and the ALJ decided that he had been wrong—those policies were fair game for an unfair labor practice liability because the employer didn’t properly "repudiate" them. Nor did it provide assurances that it wouldn’t violate the Act in such a manner in the future. On the merits, the 2013 dress ban was deemed invalid in part, notwithstanding the employer’s stated concerns on maintain its public image; the ban on wearing pins was OK, for safety’s sake. Board ruling. A divided NLRB upheld the ALJ’s findings (except, one might have predicted, as to the pins; that ban wasn’t narrowly tailored to address the asserted safety concerns). The Board also ordered the employer to issue a much more detailed notice than that proposed by the ALJ—with specific descriptions of the provisions deemed unlawful and assurances that the employer would not impose unlawful handbook policies in the future. Insufficient repudiation? The employer didn’t question the NLRB’s finding that the original policies were unlawful; rather, it contested the notion that it hadn’t taken sufficient steps to repudiate the offending provisions. Setting forth the legal framework for what constitutes repudiation, and evaluating the Board’s application of that framework to the facts at hand, the appeals court affirmed the Board’s holdings and granted its cross-application for enforcement. "Longstanding Board precedent requires that in order for an employer to be relieved of liability for a workplace policy that constitutes an unfair labor practice, an employer must repudiate that policy, even if the employer has since discontinued that policy or revised it in a manner that makes it compliant with the NLRA," the court wrote. Repudiation requires that the employer "signal unambiguously" to employees that it acknowledges its wrongful actions, acknowledges their Section 7 rights, and pledges not to interfere with them again. Absent these steps, "‘there is no assurance that the coercive effects of the initial wrongful conduct will not linger in the workplace.’" The NLRB’s findings that the employer failed to take these steps here did not, as the employer contended, "rely on an arbitrary and capricious application of the Board's repudiation precedents." As a matter of policy, the appeals court found no basis to support the employer’s contention that the repudiation requirement doesn’t apply "with the same vigor" to defunct handbook provisions. Nor was the extent of the employer's cooperation or non-cooperation with the Board in excising the unlawful workplace policies relevant in deciding whether there was a sufficient repudiation of those policies. Effect of employer cooperation. The appeals court also was not swayed by the employer’s argument that the Board’s conduct here conflicted with its previously stated policy in favor of encouraging resolution of unfair labor practices without litigation. True, the employer cooperated with the Board in revising its unlawful policies, but that was "essentially a non sequitur," the court said, because it "did not cooperate on the issue that matters, which involves providing adequate notice and assurances to employees." Dress ban unlawful. The appeals court offered an exhaustive analysis of the Board’s dress ban caselaw in determining the Board did not err in finding the employer’s dress ban here unlawful. The fact that the ban was not promulgated in response to union activity did not automatically render the dress ban lawful; nor was the employer saved by the fact that it did not enforce the ban in a discriminatory fashion. Moreover, the appeals court disagreed that the employer’s workplace safety concerns, and its desire to prevent damage to its vehicles (apparently the dealership was concerned that an employee’s pin could fall into an engine while the employee was working under the hood of a car, or scratch the car’s paint, or damage its leather interior) justified the outright ban on wearing pins. The Board didn’t find these fears were unfounded; rather, it concluded the ban was not narrowly tailed to addressing those particular concerns. (The ban applied, after all, to employees who never had contact with the vehicles, the Board had observed.) Judge Stahl concurred with the majority as to the repudiation issue but wrote separately to stress that the appeals court’s reasoning was confined to the narrow facts at hand. As for the dress ban, Stahl parted ways with the majority, finding that the dealership demonstrated that "special circumstances" justified the pin policy deemed invalid here.

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