In its March 25 decision, the NLRB unanimously held that:  (1) Tesla violated the National Labor Relations Act (“NLRA”) after prohibiting employees from talking to the media; (2) Tesla did not violate the Act by calling employees into a meeting to discuss their potential unionization; and (3) Tesla must order CEO Elon Musk to delete his tweet about the employees’ attempt to unionize, as it was unlawfully coercive in violation of the Act.

Media Contact Provision of Confidentiality Agreement Violated the Act

In 2016, Tesla required its employees to sign a confidentiality agreement in response to leaks of confidential company information.  As part of the agreement, Tesla reminded its employees that it is “never OK to communicate with the media or someone closely related to the media about Tesla, unless [the employee has] been specifically authorized in writing to do so.”

Here, the Administrative Law Judge found that the confidentiality agreement was lawful because considering that it was sent in response to leaks of confidential information, employees would “reasonably interpret” the agreement to apply only to proprietary information.  Further, the Judge found that any potential interference with Section 7 rights was outweighed by Tesla’s interest in protecting such confidential information.

In 2017, the NLRB set a new standard for determining whether facially neutral work rules or policies would unlawfully interfere with, restrain, or coerce employees in violation of Section 7 of the NLRA.  In Boeing Co., 365 NLRB No. 154 (2017), the Board held that: “[W]hen evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”  In conducting this balancing test, the Board considers the rule or policy from the employees’ perspective.  If the balance favors general employer interests, the rule or policy will be deemed lawful, but if the potential interference with Section 7 rights outweighs any possible employer justification, the rule will be deemed unlawful.

The Board applied the Boeing standard for facially-neutral work rules and reversed the ALJ, and held that the provision in the agreement that prohibited employees from talking to the media without permission was unlawful in violation of Section 8(a)(1).  The Board applied prior precedent and found that the language in the media-contact provision applied to information beyond what the confidentiality agreement defined to be “confidential information,” even if read in conjunction with the introduction explaining that the policy was created in response to leaked information.

The Board held that “[t]hat general statement d[id] not change the meaning of the plain language of the media-contact provision, which employees would reasonably interpret to apply to communications with the media about any matter regarding [Tesla], including working conditions, labor disputes, or other terms and conditions of employment.”

Additionally, because the provision did not include language limiting the restrictions to statements made to the media on behalf of Tesla, and required prior approval for any statements whatsoever, it clearly infringed on the employees’ Section 7 rights.  Tesla’s justification for attempting such restriction did not outweigh the right of its employees to communicate with the media about labor disputes and their terms and conditions of employment—a concept “central to the Act”—and, as such, Tesla violated Section 8(a)(1) by maintaining such a provision.

Tesla Did Not Violate the Act for its Conduct when Its Employees Attempted to Unionize

In 2017, a Tesla employee sent a petition to HR and to CEO Elon Musk, discussing the safety concerns of many employees and noting their intent to form a union in order to protect themselves and ensure their safety.  Shortly after circulating the petition, HR brought the employee to a conference room with Musk, seeking to directly discuss the employee’s safety concerns.  During the meeting, the employee noted that he thought a union would help give the employees a voice.  Musk responded, “[Y]ou don’t really have a voice.  The [Union] is a second—like two-class system where [the Union] is the only one that has a voice and not the workers.”

First, the Board found that the meeting with Musk did not violate Section 8(a)(1), as Tesla did not unlawfully solicit the employee’s safety concerns and impliedly promise to remedy them.  The meeting was a result of the employee’s petition that had been sent directly to HR and Musk, and was an attempt to “understandably” learn more about the serious safety concerns alleged in the petition.  Further, the petition did not detail any specific hazards and there was no explicit or implicit promise to remedy the safety concerns.  As such, the meeting could not be categorized as an unlawful solicitation of grievances.

Second, the Board concluded that Musk’s statement was lawful because “an employer may criticize, disparage, or denigrate a union without running afoul of Section 8(a)(1),” as long as the employer does not threaten an employee’s Section 7 rights.  Musk did not imply that Tesla would use unlawful means to ensure the employees were unable to unionize, and simply explained one effect of unionization—that employees would take up any grievances with Tesla through the Union, who would speak on their behalf.

Elon Musk’s Tweet Violated the Act

Even though the Board found that Tesla did not violate the act by calling an employee into a meeting to discuss unionization, the Board affirmed the ALJ’s finding that Musk’s subsequent tweet on May 20, 2018—to approximately 22 million of his followers—was unlawfully coercive:  “Nothing stopping Tesla team at our car plant from voting union.  Could do so tmrw if they wanted.  But why pay union dues and give up stock options for nothing?  Our safety record is 2X better than when plant was UAW & everybody already gets healthcare.”  The Board agreed that Musk’s commentary lost the protection of the Act because it amounted to a threat that employees would lose their stock options if they unionized; it was not a “prediction carefully phrased based on objective fact[s]” of what may occur as the result of good-faith collective bargaining.  As part of its decision, the Board ordered Tesla to have Musk delete his unlawful tweet and take steps to ensure he complies.

Takeaways

This decision instructively highlights the pitfalls with public communications on social media by the employer and supervisors in response to unionization, reaffirming the principle that while employers have a right to free speech during an organizing campaign, that right must be exercised in a manner that is not overly coercive.  The Board held that Musk’s tweet, to his 22 million followers, was unlawful principally because of the reference to the fact that Tesla employees would “give up stock options for nothing.”  This was construed as a threat—which is unlawful—rather than a potential consequence of good-faith collective bargaining negotiations if a Union were selected by the employees, which could have been lawful.  A fine distinction can be drawn based on the manner in which the statement is phrased and the surrounding context.

In addition, this decision reinforces that employers may lawfully restrict employees from talking to the media about proprietary information, but such provisions must be carefully crafted to ensure that they do not infringe on employees’ Section 7 rights.  Employers should take care in ensuring that they do not categorically restrict employees from talking to the media without prior authorization.

 

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Photo of Michael Lebowich Michael Lebowich

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional…

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He also has significant experience in representation and unfair labor practice matters before the National Labor Relations Board.

His broad employment law experience includes handling of race, national origin, gender and other discrimination matters in state and federal court. A significant amount of his practice is devoted to counseling clients regarding the application and practical impact of the full range of employment laws that affect our clients, including all local, state and federal employment discrimination statutes, the Fair Labor Standards Act, the Family and Medical Leave Act, and state labor laws.

Michael has substantial experience in a wide variety of industries, including entertainment, broadcasting, newspaper publishing and delivery, utilities and lodging. He represents such clients as The New York Times, BuzzFeed, ABC, the New York City Ballet, PPL, Pacific Gas & Electric, Host Hotels and Resorts, and The Broadway League (and many of its theater owner and producing members).  Michael also has significant public sector experience representing, among others, the City of New York and the Metropolitan Transportation Authority.

Michael is a frequent guest lecturer at Columbia Business School, the Cornell School of Hotel Administration, the New York University Tisch School for Hospitality, Tourism and Sports Management, and is an advisory board member of the Cornell Institute for Hospitality Labor and Employment Relations.

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Abigail Rosenblum Abigail Rosenblum

Abigail Rosenblum is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Abigail earned her J.D. from the University of Pennsylvania Law School, where she also completed a certificate program in business management…

Abigail Rosenblum is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Abigail earned her J.D. from the University of Pennsylvania Law School, where she also completed a certificate program in business management at The Wharton School and served as a Senior Editor of the Journal of International Law. During law school, she interned for the Honorable Eduardo C. Robreno of the Eastern District of Pennsylvania.

Prior to law school, Abigail worked in management at an industrial supply company, doing internal consultant work.