Violation of the National Labor Relations Act (NLRA) Leads to Serious Penalties

Published Date: 
June 18, 2012
Author: 
Maria Greco Danaher (Pittsburgh),

Discipline imposed pursuant to a company policy that restricts employees from any discussions of their wage rates may implicate Section 7 of the National Labor Relations Act (NLRA).  Section 7 protects the right of employees to engage in “concerted activities” with each other for the purpose of collective bargaining or in efforts to improve working conditions and terms of employment.  On June 7, 2012, the National Labor Relations Board (NLRB) issued an opinion in which it affirmed an Administrative Law Judge’s decision that an employer violated the NLRA when it fired an employee for disclosing wage rates in violation of a company rule.  Taylor Made Transportation Services, Inc, Case No.05-CA-036646 (June 7, 2012).

Section 7 of the NLRA specifically encompasses the right of employees to ascertain what wages are paid by the employer; in fact, wage discussion often are considered to be at the core of Section 7.  Kimberly Tutt was suspended and then fired for disclosing her wage rate to her fellow employees.  Tutt and her co-workers worked for Taylor Made Transportation Services, Inc., which provided passenger transportation services to the U.S. Government under a contract with the Social Security Administration.  Taylor Made had a handbook policy that required employees to maintain confidentiality of certain company information, specifically including “Compensation data.”  Further, the handbook stated that “All employee pay rates are confidential and should not be disclosed verbally, written or electronically posted for deliberate expose [sic] of rates without a valid reason.” 

During her brief (six week) employment with Taylor Made, Tutt was spoken to on multiple occasions regarding her lack of professional behavior, both with passengers and co-workers.  In addition, Tutt was informed by the company’s human resources director that it had been brought to the company’s attention that employees were upset because Tutt had disclosed her rate of pay, which was higher than some of her co-workers.  Tutt was then informed that she was being suspended for five days, and that management would decide whether to continue her employment.  At the conclusion of her suspension, Tutt was discharged.  Tutt testified that she was told by human resources that her termination was due to discussing with and disclosing confidential pay rates to fellow employees.  Although Taylor Made stated to the NLRB, in response to Tutt’s NLRB complaint, that the firing was based on “inappropriate cell phone usage” and “lack of professional behavior,” the company’s human resource director previously had reported to a unemployment compensation claims examiner that the reason for termination was Tutt’s “failure to follow policy in disclosing her wages.”

The Administrative Law Judge found that Taylor Made had violated the NLRA by promulgating a policy that explicitly prohibits employees from discussing compensation, because such a rule is “unlawful on its face.”  That determination subsequently was upheld by a three-member panel of the NLRB, which agreed that the company had imposed discipline against Tutt pursuant to an “unlawfully overbroad rule” and therefore, had violated the NLRA. 

While the ALJ’s analysis and opinion is worth reading, the issue of which employers should be aware is the range of penalties imposed against Taylor Made for its violation of the NLRA.  Those penalties included reinstatement of Tutt to her former position; payment of lost earnings and benefits to Tutt; removal of information related to the discipline and termination against Tutt from her personnel file; rescission of the handbook policies and provisions that precluded employees from discussing pay rates; and the posting of a Notice, drafted by the NLRB, for 60 consecutive days “in conspicuous places” throughout Taylor Made’s facility. 

The Notice, which is attached to the NLRB’s opinion, includes information regarding the NLRA, and begins by informing employees, in capital letters, that: “FEDERAL LAW GIVES YOU THE RIGHT TO: Form, join, or assist a union . . . ,” going on to list the rights of employees under the NLRA, and to enumerate the things that Taylor Made was prohibited from doing under that Act.  The Notice also includes details about Tutt’s circumstances, her reinstatement, and the payment of her back wages and benefits. 

Company handbooks and policies cannot preclude employees from discussing the terms and conditions of their employment, unless such discussions actually interfere with the employee’s own work or otherwise actually interfere with the operation of the business, and that act of interference – and not the violation of the rule – was the actual reason for termination.  In this case, the employer did not assert that affirmative defense, and ultimately was found to have violated the provisions of the NLRA, making itself subject to the penalties available to be imposed under that Act.