Federal Appeals Court Rejects NLRB’s Strict Dress Code Standard

The U.S. Court of Appeals for the Second Circuit ruled on Sept. 2 that the NLRB’s 2022 Tesla framework improperly favored employees’ organizing rights over employers’ legitimate business interests. The decision, arising from a dispute involving Starbucks employees wearing union apparel, could make it easier for employers to defend uniform and dress code policies against unfair labor practice charges.

However, the ruling does not give employers unrestricted authority to regulate workplace attire, particularly when union activity is involved.

Toolkit: Managing Employee Dress and Appearance 

The Starbucks Dress Code Dispute 

The case, Siren Retail Corporation, d/b/a Starbucks Reserve Roastery v. NLRB, originated at a Starbucks Reserve Roastery in New York City in 2022.

During a union organizing campaign, several employees arrived at work wearing black T-shirts displaying the Starbucks Workers United name and logo. Management instructed them to change into clothing that complied with the company’s dress code, prompting an unfair labor practice charge.

The dispute centered on three policies: a restriction limiting employees to one union pin, a prohibition on pins addressing political, religious or personal issues, and a rule restricting unapproved logos or writing on shirts.

The National Labor Relations Board (NLRB) ultimately found all three restrictions unlawful under its Tesla standard, which presumed that workplace dress codes restricting union insignia violated federal labor law unless employers demonstrated special circumstances and narrowly tailored their restrictions.

Starbucks challenged that determination, arguing that its policies reflected legitimate business interests.

Why the Second Circuit Rejected the Tesla Standard

The Second Circuit concluded that the NLRB’s approach conflicted with the Supreme Court’s longstanding precedent in Republic Aviation Corp. v. NLRB, which requires balancing employees’ organizing rights against employers’ interests in workplace discipline and business operations.

“The Second Circuit said the Tesla framework misreads the Supreme Court’s decision in Republic Aviation,” explained Tim Garrett, an attorney at Bass, Berry & Sims PLC in Nashville. “Under Tesla, the NLRB presumed that nearly any workplace dress rule restricting union insignia was unlawful, and it upheld a rule only if the employer showed the rule was narrowly tailored to a specific business need.”

According to Garrett, that approach effectively imposed an excessively demanding standard on employers.

“The Second Circuit’s ruling represents a meaningful shift,” he said. “Employers no longer start out presumed to be in violation or bear such a heavy burden to justify their policies. Instead, they are on more equal footing in a true weighing of interests.”

The court also emphasized that the extent of a restriction matters. A policy limiting employees to one union pin, for example, does not necessarily interfere with organizing rights to the same degree as a complete prohibition on union-related messages.

Indeed, the court upheld Starbucks’ one-pin restriction based on earlier circuit precedent recognizing the company's interest in preventing excessive visual clutter on employee uniforms.

The court rejected the NLRB’s analysis of the other two policies and returned those issues to the agency for reconsideration under a more balanced standard.

Sample Policy: Attire and Grooming Policy

What the Ruling Means for Employers

The decision provides employers with greater latitude to maintain dress codes designed to protect brand identity, promote uniformity, and address operational concerns.

“The Second Circuit’s decision gives employers greater freedom to enforce dress codes and uniform policies, but within limits,” said Hunter Yoches, an attorney at Bass, Berry & Sims PLC in Nashville. “Facially neutral, consistently applied policies grounded in legitimate business interests now stand on stronger ground.”

Nevertheless, employers should not interpret the decision as permission to prohibit union apparel categorically.

“That freedom is not unlimited, though. Courts will still weigh the policy against employees’ rights,” Yoches cautioned.

The ruling also follows a 2023 Fifth Circuit decision rejecting the Tesla framework, increasing pressure on the NLRB to reconsider its existing standard.

Garrett believes a broader policy change is increasingly likely.

“The signs point to the NLRB abandoning the Tesla standard and reinstating its prior approach,” he said.

The board could restore the more employer-friendly framework established in its 2019 Wal-Mart Stores decision or develop another standard altogether. Until then, Tesla remains the board's existing precedent, notwithstanding the appellate setbacks.

Practical Steps for HR and Employers

For employers reviewing their workplace appearance policies, the immediate priority should be ensuring that restrictions are neutral, consistently enforced, and supported by legitimate business considerations.

“Even after the Second Circuit’s ruling, employers should still look carefully at how their dress code policies are written and enforced,” Yoches advised. “Policies should be facially neutral. They should apply to all non-approved messages rather than singling out union expression, and they should be enforced consistently.”

Safety-related restrictions should also be connected to identifiable workplace hazards, while brand-related rules should have a defensible business rationale.

With federal appellate courts challenging the NLRB’s approach, employers have stronger arguments for defending reasonable workplace appearance standards. But selectively enforcing those rules against union supporters could still invite legal challenges, making careful policy drafting and consistent application essential.