An administrative law judge recently held that an employer’s policy against moonlighting without the company’s approval violates the National Labor Relations Act (NLRA). This decision applies even to businesses with no unionized employees.
Section 7 of the NLRA gives employees the right to “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Section 8(a)(1) of the NLRA makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7.”
The general counsel of the National Labor Relations Board (NLRB) argued that the provision in Nicholson Terminal & Dock Company’s personnel handbook banning moonlighting without company permission violates the NLRA because it’s overly broad and would reasonably tend to chill employees in the exercise of their Section 7 rights.
The company, however, contended that its rules don’t implicate Section 7 rights, and, even if they do, the impact on employees’ NLRA rights is outweighed by its legitimate justifications for the rules, that is, that the employees need to be well-rested and alert, and that Nicholson doesn’t want its employees working for its competitors.
Further, argued the company, the union agreed to the rules, no one had objected to them, and no employee had been disciplined under them.
Nicholson operates a commercial dock and has some employees who are members of the International Association of Machinists and some employees who aren’t union members.
The moonlighting restrictions in its personnel handbook read:
Employees are expected to devote their primary work 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 would be adversely affected.
Before obtaining any other employment, you must first get approval from the Company Treasurer.
The administrative law judge held that the company’s “no moonlighting without permission” rule is a facially neutral rule (that is, it doesn’t explicitly implicate Section 7 rights). Notwithstanding this fact, the judge went on to point out that employees might reasonably believe would impact their Section 7 rights to organize, to associate with other employees, and to affiliate with and work for unions without their employer’s knowledge or interference.
She then considered whether the potential impact on NLRA rights is outweighed by the employer’s legitimate justifications for the rule and found that it was not.
Acknowledging that an employer can expect employees to devote their working time to the employer’s business, she noted that Nicholson’s restriction on moonlighting “by definition” interferes with nonwork time, writing:
When engaging in organizing efforts, including salting or dissenting union efforts as well as efforts supporting a recognized union in a labor dispute, employees may participate in efforts that “could be inconsistent with the [employer’s] interests” or that “could have a detrimental impact” on the employer’s image with customers or the public.
Moreover, requiring employees to get management’s preapproval before engaging in Section 7 activities is particularly coercive and would tend to chill that activity.
The administrative law judge went on to point out that the portion of the rule banning moonlighting that could “require devoting such time and effort that the employee’s work would be adversely affected” adequately addressed Nicholson’s concern about fatigue.
Next, she indicated that the concern about employees working for competitors “could be addressed with a better tailored rule.”
Given this decision, employers should review their anti-moonlighting policies to ensure that they do not unreasonably impact employees’ Section 7 rights and, if necessary, revise those policies so that the restrictions are narrowly tailored to protect specific legitimate concerns.
Even if your company is not subject to NLRB jurisdiction, it should take steps to ensure that its policies are specific and not overreaching.
Please feel free to contact us if you have any questions about anti-moonlighting restrictions or if you need help updating your employee handbook.
