NLRB issues further guidance on employment policies

By Stacey Mark
March 22, 2015

On March 18, 2015, the General Counsel for the NLRB issued a new memo providing guidance on common employer rules and policies that run afoul of Section 7 of the National Labor Relations Act.  The memo is divided into two parts.  In the first, the NLRB compares rules it found lawful with those that are unlawful, and provides its reasoning for both conclusions. The section includes employer rules that are frequently at issue before the agency, addressing issues such as:

  • Confidentiality
  • Professionalism and harassment
  • Communication with the media
  • Restrictions on the use of company logos, copyrights, and trademarks
  • Prohibitions on photography and recording (including the possession and use of personal recording devices)
  • Restrictions on leaving work
  • Conflicts of interest

The second section of the memo addresses handbook rules from a recently settled unfair labor practice charge against Wendy's International LLC, which followed an initial determination by the NLRB that several of Wendy's handbook rules were unlawful.  

Consistently with prior GC memos, the differences between rules and policies the NLRB found lawful and unlawful were not always obvious, or even consistent with each other or past interpretations.   Nevertheless, the memo is worth reviewing as a summary of the NLRB's current thinking and should serve as a reminder to employers that, if they have not updated their handbooks in a while, this is a good time to do it.  

Employers that take such advice to heart should also keep in mind the NLRB's recent reversal of the longstanding precedent under which employers were permitted to ban employees from using the company's email system for non-business purposes.   In Purple Communications, Inc., decided December 11, 2014, the NLRB held that employers given access to the company's email system must be permitted to use the system for communications protected under Section 7 during non-working time, unless the employer can show that special circumstances exist (most will not be able to make the required showing).

You can review our previous coverage of NLRB actions on rules, policies, and settlement terms here and here and here.  You can also find more in depth coverage on our website, here (see part 7, Employer Confidentiality Policies Under Attack by Federal Agencies).

For owners of closely held corporations, remedy for oppression must match the wrong

By Dan Larsen
March 6, 2015

Last week the Oregon Court of Appeals examined the remedies that a trial court may impose to remedy shareholder oppression.  In Hickey v. Hickey, ownership of a family ranching business was divided among several siblings.  One sibling acquired a majority interest by purchasing shares from others.  As controlling shareholder, he engaged in self-dealing and commingling of assets, to the detriment of the remaining minority shareholder.   The minority shareholder then filed suit under ORS 60.952 to impose remedies for oppression.  The trial court ordered amendment of the bylaws and articles of incorporation to strip the voting rights of the majority shareholder and remove him from management. 

 The appellate court reviewed the nonexclusive list of remedies provided under ORS 60.952 to rectify oppressive conduct, including: (1) cancellation or alteration of any provision in the corporations articles of incorporation or bylaws, (2) removal from office of any director or officer, (3) appointment of a custodian to manage the business, (4) appointment of a provisional director, (5) retention of jurisdiction by the trial court for protection of the minority shareholder, or (6) dissolution of the corporation.  While the trial court has many remedies to choose from, "[t]he remedy must correspond to the wrong--or legally recognized right--for which the remedy is provided under ORS 60.952." 

The Court of Appeals reversed the trial court, holding that the effect of the remedy selected was to convert the minority shareholder into the majority shareholder.  That constituted  a windfall to the plaintiff and was not within the "reasonable expectations" of either party.  The appellate court then remanded the case to the trial court with instructions to devise a more appropriate remedy, such as ordering a share purchase for fair value to remove one of the two shareholders from the business.

Nonprofit's governing documents dictate scope of director's liability

By Lori Irish Bauman
March 3, 2015

Last week the Oregon Court of Appeals addressed the liability of directors of a nonprofit corporation, reversing summary judgment for directors of a homeowners association on breach of fiduciary duty claims.

In WSB Investments, LLC v. Pronghorn Development Company, LLC, plaintiff was an owner of a timeshare and a member of the HOA that asserted various claims against the directors, including breach of fiduciary duty. In reviewing the trial court's grant of summary judgment, the court discussed the standards for directors' obligations to a nonprofit. While ORS 65.369(1) imposes liability for gross negligence or intentional conduct, the legislature has not defined gross negligence in this context. The court held that, for directors' liability, gross negligence means negligence characterized by near total disregard or indifference to the rights of others or the probable consequence of a course of conduct. The court further held that, while ORS 65.357 states the standard of care of uncompensated directors of a nonprofit, whether those standards have been violated must be determined with reference to the obligations set out in the governing documents.

Accordingly, the court found triable issues of fact as to,among other things, the use of reserve funds for operating expenses and failing to elect new board members in a timely fashion, all in violation of the HOA's governing documents.