Dress code policies and court review of NLRB cases
In September, the 2nd Circuit of the U.S. Court of Appeals rejected the NLRB’s finding that all dress code policies are presumptively unlawful violations of the NLRA, requiring instead a balancing test between the employer’s interests and the employees’ rights under the Act.
The case is Siren Retail Corporation, d/b/a/ Starbucks Reserve Roastery v. National Labor Relations Board (No. 24-3168) and involves Starbucks employees who wore shirts bearing the Starbucks Workers Union emblem during a national campaign to negotiate a first union contract.
The employees changed out of the union-emblem shirts and into Starbucks-compliant clothing at management’s request and later filed ULPs with the NLRB alleging violations of sections 7 and 8(a)(1) for interference with employee rights to wear union insignia on their uniforms.
The case is important – not only because it provides specific guidance on dress code policies, but also because it clarifies the U.S. Supreme Court’s new framework for judicial review of Board decisions.
The dress code issue.
The Board’s own decision in Tesla, Inc., 371 NLRB No. 131 (Aug. 29, 2022), created a new, strict, and employee-friendly standard for dress code evaluation under the Act. By initially presuming all dress code policies unlawful and then requiring the employer to overcome that presumption with substantial evidence of narrow tailoring for special circumstances, employers were at high risk of NLRA violations.
In Starbucks Reserve, the employer’s dress code had three components: 1) a “one-pin” limitation on union-insignia buttons or pins; 2) a ban on “political, personal, or religious” issue buttons or pins; and 3) a ban on “colors, designs, logos or writings” other than those approved by Starbucks management.
The court wrote, “From the NLRA’s earliest days, courts have recognized that Section 7 protects the right of employees to wear items, including pins and buttons, that relate to the terms and conditions of employment, unionization, and other protected matters.” (p. 16)
The court found the Tesla reasoning flawed and required a return to the “balancing test” in Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945), that considers the relative interests of employees and employers to reach a reasonable conclusion – without any presumptions in favor of either the employees or the employer.
Employers have a legitimate interest in ensuring that employee appearance and clothing are appropriate to advance the aims of the business.
Employees have a legitimate interest in ensuring that the rights granted to them under sections 7 and 8 of the NLRA are not infringed upon, including the right to wear union insignia in an appropriate manner.
The Starbucks Reserve decision, combined with a new NLRB general counsel and a Republican-majority NLRB, support a prediction that typical dress code policies will usually be considered lawful by the NLRB and the Courts. Policies that clearly infringe on employee rights, such as the right to join, form, organize or advocate for a union, will continue to be unlawful.
Judicial review of NLRB decisions.
The U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raymundo, 603 U.S. 369 (2024) overruled Chevron U.S.A. Inc. v. National Resources Defense Council, Inc., 467 U.S. 837 (1984).
Under the long-standing Chevron doctrine, courts were required to defer to the NLRB’s reasonable interpretations of ambiguous statutes when reviewing NLRB decisions.
The NLRA was designed to be ambiguous and flexible so Boards through the years can use their current contexts to decide issues. The Act prohibits such things as discrimination, coercion, interference, promises, threats and other behaviors that require definitions that can change over time.
This flexibility has allowed the NLRA to remain viable with few changes for over 90 years. However, the same flexibility has resulted in fluctuating interpretations of the act to the frustration of unions, employers and employees. For example, former NLRB General Counsel Jennifer Abruzzo considered “captive audience meetings” to be inherently coercive and unlawful. Current General Counsel Crystal Carey will more likely consider the meetings lawful and part of an employer’s statutory rights under the Act.
In Loper Bright, the U.S. Supreme Court wrote that it is the court’s domain to decide interpretation of statutes like the NLRA with no deference to administrative agency interpretations. The Board’s interpretations may be “persuasive,” and considered by courts, but reviewing courts have an obligation to determine the law “de novo” (anew).
Starbucks Reserve clarified that Loper Bright can be viewed in two segments: 1) the law; and 2) the facts. The courts will determine the applicable legal standards to apply “de novo” and without deference to the NLRB’s interpretations, but will still defer fact-finding to the NLRB as long as a reasonable person could find “substantial evidence” supporting those facts.
Simply stated, the courts will likely leave the facts to the agency. Then the courts will listen to the arguments of all parties on the applicable law and make legal interpretation decisions afresh.
The Starbucks Reserve case serves as binding precedent for the 2nd Circuit only and not for the rest of the country. However, the U.S. Supreme Court has signaled clearly in Loper Bright and other recent cases that it intends to restrict the power of administrative agencies to ensure that they stay in their lanes and don’t infringe on the rights of Congress to create laws or the judiciary to interpret them.
Employers can mitigate the risks of employment law violations by ensuring that supervisors and other leaders are properly informed and trained to know the company’s standards and expectations as well as current legal requirements.
Call Gary Kleckner, MARC Vice President: 216-973-7323 and see how MARC can help identify and satisfy your interests in a strong and engaged workforce.