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National Labor Relations Board Upholds Policy Banning Outside Employment

    Client Alerts
  • July 24, 2020

In its Boeing Co. decision, the National Labor Relations Board established a relaxed standard for determining whether company policies unreasonably interfere with employees’ right to engage in concerted activity under Section 7 of the NLRA. Since that decision, administrative law judges and the board have applied its reasoning to a wide range of handbook and other policies and procedures. Last week, the NLRB determined that an employer policy banning outside employment without advance company approval met the applicable legal test.

In G&E Real Estate Management Services, the administrative law judge determined that a range of employer policies failed the Boeing test because employees could reasonably read the policies to prohibit activities protected under Section 7. The bar on outside employment could have been read to stop employees from working on behalf of a union seeking to organize the workplace.

On appeal, the NLRB reversed this decision, stating that the proper legal test is not whether the policy could be read to prohibit such activities but rather how a reasonable employee would interpret the policy. In this case, the policy was clearly meant to avoid business conflicts of interest, not to stop volunteer efforts. The board made similar interpretations for the other challenged policies, including a ban on outside speaking.

This decision demonstrates the NLRB’s unwillingness to allow Section 7 challenges to standard employee handbook policies. Absent some expression of intent to prohibit protected activity, these ordinary policies and procedures will not be subject to meaningful legal challenge.