NLRB: Employers Can Require Employees Get Approval Before Taking a Second Job

 

Nicholson Terminal & Dock Company - NLRB

Facts:  Nicholson Terminal & Dock Company (“Nicholson”) operated as a maritime cargo company with two facilities in Detroit and Ecorse, Michigan.  Most of Nicholson’s employees are represented by International Association of Machinists Local Lodge 698.  Since September 2016, Nicholson has maintained a Personnel Handbook which provides in part:

Moonlighting 

• Employees are expected to devote their primary efforts to the Company’s business.  Therefore, it is mandatory that they do not have another job that:
• Could be inconsistent with the Company’s interests.
• Could have a detrimental impact on Company’s image with customers or the public.
• Could require devoting such time and effort that the employee’s work could be adversely affected.
• Before obtaining any other employment, you must first get approval from the Company Treasurer.  Any change in this additional job must also be reported to the Company Treasurer.

The Administrative Law Judge considered the legality of this Moonlighting rule and held it to be unlawful on the grounds that it would have a “significant potential impact” on employees’ exercise of their National Labor Relations Act (“NLRA”) rights because organizing activities on behalf of a labor organization, including by paid salts, could be seen as “inconsistent with [Nicholson’s] interests” or as “hav[ing] a detrimental impact on [Nicholson’s] image with customers or the public.  The Administrative Law Judge held that while Nicholson had a legitimate interest in avoiding conflicts of interest that could arise if its employees moonlighted for a competitor, Nicholson’s rule was nevertheless unlawful because it could be “addressed with a better tailor rule.”  Consequently, because Nicholson’s rule was found to have restricted Section 7 of the NLRA, the requirement to obtain permission before obtaining outside employment was also unlawful.  The NLRB proceeded to review the Administrative Law Judge’s ruling.

Analysis:  (Note, this analysis only looks at the Moonlighting rule of Nicholson.)

At the outset, the NLRB recognized that the rule applied only to outside jobs (i.e. paid employment.)  Nicholson’s Moonlighting rule was put in place to ensure that its employees “devote their primary work efforts to the Company’s business.”  Nicholson’s treasurer had testified, without rebuttal, that the purpose of this rule was to ensure that Nicholson’s employees did not work for a competitor or work so many elsewhere that they would be too exhausted to work their regular shift at Nicholson.  Nicholson’s rule did not impose any restrictions on its employees becoming members of a union or volunteering on a union’s behalf.

As for the Administrative Law Judge finding that Nicholson’s rule could have been “better tailored”, the NLRB held that Nicholson’s rule should not be condemned simply because it “could have been written more narrowly to eliminate potential interpretations that might conflict with the exercise of Section 7 rights —interpretations that might occur to an experienced labor lawyer but that would not cross a reasonable employee’s mind.” 

The Takeaway:  This was an intriguing ruling from the NLRB.  As many employees likely engage in some form of moonlighting in some form or fashion, this was a decision worth highlighting for that reason alone.  It is worth noting that the NLRB conceded that Nicholson’s rule could have been better written requiring approval from its treasurer before moonlight would be allowed, that alone was not a sufficient reason for finding it unlawful.  Rather, based in part upon the uncontroverted testimony of Nicholson’s treasurer, I believe the NLRB got it right here in finding that no violation of the NLRA occurred in regard to the language of Nicholson’s Moonlighting rule for its employees.

Date:  July 30, 2020

Order:  https://apps.nlrb.gov/link/document.aspx/09031d45831bc43b