Overbroad Employee Handbook Rules Invalidated

By Scott M. Abbott Dec 8, 2015

Overbroad employee handbook rules that expressly or impliedly restrict employees from engaging in protected concerted activities are invalid under the National Labor Relations Act (NLRA), according to the U.S. Court of Appeals for the D.C. Circuit.

Sandra McCullough worked for Hyundai America Shipping Agency Inc. When McCullough was terminated from her job for violating certain employee handbook rules, she filed an unfair labor practice charge with the National Labor Relations Board (NLRB). In her charge, McCullough claimed she had been fired for engaging in protected concerted activities in violation of her Section 7 NLRA rights.

At McCullough’s hearing, an administrative law judge found that Hyundai would have fired McCullough regardless of whether she had violated the handbook rules at issue. The NLRB agreed and determined that McCullough’s termination was not unlawful.

However, the judge also reviewed the four work rules implicated in McCullough’s termination to determine whether they violated employee rights under the NLRA. There were four specific rules reviewed: 1) a rule prohibiting employees from discussing matters under investigation; 2) a rule limiting disclosure of information from Hyundai’s electronic communication and information systems; 3) a rule prohibiting activities other than work during working hours; and 4) a rule urging employees to make complaints to their supervisors rather than to fellow employees. The judge invalidated all four rules as violations of the NLRA, and the NLRB agreed.

On appeal by Hyundai, the court reviewed each of the challenged rules. As to the rule prohibiting employee discussions regarding matters under investigation, Hyundai stated that it had an important obligation under various anti-discrimination laws to keep internal investigations confidential. The court agreed that confidentiality in certain types of investigations, such as those involving sexual harassment allegations, was important. However, the court stated that the blanket limitation on discussions regarding any matter under investigation was overbroad. As a result, the court agreed with the NLRB that the confidentiality rule was invalid.

Hyundai’s electronic communications rule limited the disclosure of information from its network to “authorized persons.” The NLRB found that a reasonable employee could interpret that rule as a prohibition on sharing information with other employees about terms and conditions of employment. The court agreed and invalidated this rule as overbroad.

The working hours rule restricted employees from performing activities other than work during “working hours” and potentially subjected them to discipline. The court’s focus here, like that of the NLRB, was on use of the term “working hours.” As the court explained, working hours include all time within the beginning and end of a shift, including breaks. By contrast, the term “working time” excludes employee breaks. Hyundai’s rule, therefore, impermissibly encroached on employee activities during break time, according to the court.

The court disagreed with the NLRB about Hyundai’s employee complaint rule. That rule encouraged employees to report any concerns to their immediate supervisor or to the HR department through an open-door policy. This rule also stated, “Complaining to your fellow employees will not resolve problems. Constructive complaints communicated through the appropriate channels may help improve the workplace for all.” This language was not mandatory or preclusive of alternatives, according to the court. In addition, the rule did not prescribe penalties if employees complained to other employees. As a result, the court did not find this rule unlawful.

Hyundai America Shipping Agency, Inc. v. NLRB, D.C. Cir., No. 11-1351 (Nov. 6, 2015).

Professional Pointer: Work rules that restrict employees from engaging in protected concerted activity, or that could be reasonably interpreted that way, will likely be struck down if challenged under the NLRA. Employers, therefore, should be proactive in revising such rules as necessary.

Scott M. Abbott is managing partner of Kamer Zucker Abbott, the Worklaw® Network member firm in Las Vegas.


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