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NLRB Says Corporate Code of Ethics and Conduct Does Not Interfere With Employees' Concerted Activity Rights

    Client Alerts
  • March 22, 2013

In recent years, employers have expressed increasing concern over a series of National Labor Relations Board cases calling into question the legality of standard employment policies. For example, the Board indicated last year that standard employment at-will language in an employee handbook might violate the NLRA because it does not explain that employees have the right to change such status through collective bargaining. In that case, the Board's legal counsel later clarified its position, making clear that the at-will language itself was not considered illegal.

Earlier this month, the Board's counsel took a similar position with respect to a corporate code of ethics and conduct. These codes are an increasingly popular way for companies to explain their ethical expectations of employees, and provide some legal protection in the event of unauthorized criminal or civil violations by employees. Boeing's code includes common language stating that employees cannot engage in conduct that could damage or call into question the company's reputation for ethical behavior. One of Boeing's unions complained to the NLRB that this language interferes with employees' rights to bargain and to pursue concerted activity.

The Board's counsel rejected this interpretation, finding the Boeing policy in compliance with the NLRA. The Board counsel took a common sense approach, reviewing the context of the code provisions. Boeing clearly intends the code to apply to described activities such as antitrust, securities and environmental compliance. No reasonable person would read the cited code provisions to apply to employee rights under the NLRA. Moreover, the code contains a provision stating that it does not affect any employee's exercise of his or her legal rights.

While Boeing prevailed in this interpretation, the very fact that policies such as the code are being legally challenged remains troubling. Employers should make certain that all handbooks and other policies guiding employee behavior contain appropriate disclaimers and protections of employees' legal rights.