Not so fast.

The Seattle City Council voted unanimously to pass an ordinance, the first of its kind in the country, to allow Uber, Lyft and other ride-hailing apps to organize. The law is likely to face challenges on several fronts. For example, independent contractors bargaining together over prices and compensation could run up against anti-price-fixing laws. Seattle’s mayor has also held off on implementing the law, citing the city’s need to study the unknown costs of administering a collective bargaining process. And finally, we can expect the law to be challenged as running afoul of federal “preemption” principles. In Machinists and Aerospace Workers v. Wisconsin Employment Relations Commission, 427 U.S. 132 (1976), the U.S. Supreme Court held that federal labor law prohibits state law regulation of an area of labor activity or management-union relations that Congress has left intentionally unregulated. In the case of the Seattle ordinance, it would not be surprising to see opponents challenge the law on that ground – the theory being that Congress put independent contractors beyond the reach of federal labor law and therefore intentionally left that area of labor relations open to the play of free market forces (rather than collective bargaining). This doctrine has come to be known as “Machinists preemption.”

David Plouffe, now at Uber and formerly President Obama’s campaign advisor, anticipated the Machinists argument when Seattle’s City Council approved the new law. “Well,” he said, “there’s very clear federal law on this, that independent contractors cannot be organized.” The problem, however, is that it may not be so clear. In fact, said Wilma Liebman, who served on the National Labor Relations Board (“NLRB”) during the Clinton, George W. Bush and Obama administrations, “my view is the opposite.” Why? Because, the argument goes, the fact that Congress excluded independent contractors from the coverage of the NLRB doesn’t necessarily mean that Congress further intended that they have no bargaining rights at all – just no bargaining rights specifically under the NLRA. That leaves a theoretical door open to state and local law creating labor rights for independent contractors that don’t exist under federal law. That’s exactly the theoretical door that Seattle has now actually opened with the new ordinance.

The idea that state and local governments can fill gaps in workers’ rights left open under federal law isn’t new. California did it in the 1970s for farm workers, who are also specifically excluded from the coverage of the NLRA. “I don’t think anyone has ever said that California can’t do that,” Liebman observed.

In the past two years, we have seen aggressive pro-employee legislation taking root across the country in both states and municipalities. Take, for example, the large number of cities and states that have significantly raised the minimum wage for all workers from 2013-2015, and the 11 or so cities contemplating similar increases now. State and federal agencies charged with implementing and enforcing employment and labor laws have also taken a tougher, more aggressive stance in their interpretation and enforcement of the law; the NLRB itself, for example, vastly expanded its view of what a “joint employer” is in a series of McDonald’s-related cases in an effort to assist large-scale union organizing efforts that have been limited in the past by the fast-food franchise model.

State and local law extending bargaining rights to workers who previously had none – or facilitating renewed organizing efforts in industries with lower union membership – may be the next wave in the general trend. In 2016, employers should remain alert of legislative efforts to do just that. As the Seattle law demonstrates, old, dependable assumptions about the way labor law works may need to be discarded (or at least carefully reviewed) in light of creative state and local efforts to expand worker protections and tilt the labor balance to workers, who are perceived by the labor movement as having lost ground to companies’ unilateral power over the years.

As we noted in a previous post, the Board has been particularly aggressive in finding employer policies will run afoul of Section 7 of the Act even when they have strong threads of common sense attached to them. In the case we reported on in March – Latino Express, Inc., NLRB Case No. 13-CA-122006 (Mar. 17, 2015) – the Board came down against an employer even when the employer had already rescinded its questionable policy. The Board was very unforgiving in that instance and seems to be continuing that trend.

In Rocky Mountain Eye Center, NLRB Case Nos. 19-CA-134567, 19-CA-137315 (May 6, 2015), two employees of a physician’s office were terminated for disseminating records housed on the office’s information system, a system that included both patient and employee data. To protect this information, the company’s confidentiality rule stated that a “[b]reach of either patient or facility confidentiality is considered gross misconduct and may lead to immediate dismissal” and defined “confidential information” as including, but not limited to “patient information, physician information, personnel information, billing, purchasing and financial information.” So far, so good, right?

To support a union organizing drive, the two employees at issue had accessed the employer’s information systems to obtain contact information for several other employees, for the purpose of having the Union contact them. When the Union began contacting these employees, the employees questioned how the Union received their contact information, which prompted an investigation into whether a breach of the office’s records occurred. After an investigation, the company determined that the employees breached the confidentiality rule by accessing and disseminating the employee information, housed in the same system as patient data, and were terminated in accordance with the company’s confidentiality rule.

Of course, the NLRB held that the termination was unlawful. After first concluding that the confidentiality rule could reasonably be construed to restrict Section 7 rights, the NLRB reasoned that it was overly broad in that it included a prohibition against utilizing employee contact information which could be used for Union organizing. Further, the employer made the mistake of housing both employee and patient data on the same system, and such a mistake could not be attributed to the employees who were merely exercising their Section 7 rights by collecting employee contact information, not patient information.

Although not as shocking as the decision in Latino Express, the beat is clearly continuing to go on at this activist NLRB. With another unforgiving decision, employers should continue to be vigilant in reviewing their policies and be prepared to defend against similar charges from the Board. Oh, and while you’re at it, it’s a good idea to keep employee information separate from customer, client and patient data.

The case is remarkable in that, now, employers’ property rights in their own electronic systems – systems they pay for, create, maintain, and are liable for – are trumped by employees’ rights to proselytize in favor of labor unions. Even more remarkably, a neutral employer policy prohibiting employee email use for all non-work purposes now violates federal law because at least one among “all” purposes could include union organizing.

Although the rights of workers to express and solicit support for unions have long been sacred under federal law, the NLRB has created an expansive presumption under federal labor law that “employees who have rightful access to their employer’s email system in the course of their work have a right to use the email system to engage in Section 7-protected communications on nonworking time” – and, unavoidably, that employers have exceptionally limited rights to control that use.

Lest there be any doubt that the NLRB’s holding is far-reaching and creates substantial new burdens on employers, the NLRB also made clear that “it will be the rare case where special circumstances [will] justify a total ban on non-work email use by employees.”

Diminishing Employers’ Property Rights

Most employers would reasonably believe they have a right to control email systems, like any other physical thing they own. In Purple Communications, however, the NLRB distinguished email from other things employers own, reasoning that email systems are “materially different” from other employer-owned equipment that, under traditional property law, naturally give employers a right to restrict employee use. The NLRB analogized a ban on email communication to general bans on oral solicitation during nonworking time which, under traditional NLRB precedent, are viewed as barriers to employees’ efforts to organize.

Put simply, a restriction on use of email is now viewed by the NLRB as the same as a restriction on any other kind of oral communication. Purple Communications therefore creates a presumption that “employees who have rightful access to their employer’s email system in the course of their work have a right to use the email system to engage in Section 7-protected communications on non-working time.” And in this context, “rightful access” means virtually any access.

No Real Limits

In holding that employees can use employer e-mail for non-work purposes, the NLRB has opened a can of worms – though the NLRB’s decision takes pains to deny this. The NLRB went out of its way to say that the principle of Purple Communications is “narrow” and “limited,” because an employer may justify a general ban on nonwork-related email use by showing that “special circumstances necessary to maintain production or discipline justify restricting its employees’ rights [to email use].” The NLRB’s decision also purports to limit its own reach by protecting employee emails about union organizing on “nonworking” time. But these limits are more theoretical than real, for at least two reasons.

First, the NLRB’s new rule shifts from an assumption that an employer can control its own email system (provided that it does not discriminate specifically against “union talk”) to an assumption that an employer can’t lawfully control its own email unless it can affirmatively show that the control is necessary to protect “production or discipline.” Employers will now have to work much harder in justifying policies limiting email use.

Second, the notion of “nonworking” time is slippery at best, and provides almost no guidance to employers on how to comply with the new state of the law. It seems clear that an employee who is not at work, and who is not permitted to use work email during such nonworking time, is on “nonworking” time for purposes of the NLRB’s new rule. But what about an employee who is walking down the hall to the break room with an iPhone and shoots off an all-employee email blast in support of a union – is that “nonworking” time? And what about an employee who is expected, like many employees nowadays, to have access to and use employer email systems after hours? Particularly with a pro-union and highly politicized NLRB, it is difficult to imagine more than a few very limited circumstances in which employee solicitation by email for organizing purposes is not authorized and protected by the NLRB’s new decision.

Looking Ahead

Many, if not most, employers restrict employee use of email systems for nonwork-related purposes. Purple Communications means that thousands of U.S. employers will now need to examine, reevaluate, and revise such policies, whether or not those policies were specifically aimed at union organizing activity.

Employers should review their employee handbooks and other relevant policies governing employee use of company email, and determine whether they restrict employee use during nonworking time. To the extent such restrictions exist, they must be carefully analyzed so that they fit within the narrow exceptions the Board laid out in its decision. For instance, enforcement of such restrictions must now be consistent, uniform, and protect an employer’s interest in maintaining “production” and “discipline” by the least restrictive means. If the restrictions do not help maintain production or discipline, cannot be consistently and uniformly enforced, or are not the least restrictive means to achieving that protection, they may need to be removed altogether.

Finally, in gray areas the Board’s decision has created – such as how to justify restrictions as being for production and discipline as well as the definition of “nonworking time” – employers should actively work with counsel to find ways to defend against the unfair labor practices that will no doubt come their way

Kelley Drye & Warren will continue to monitor the developments in subsequent Board rulings. In the meantime, please contact our Labor and Employment group for any questions related to compliance with the NLRB’s new rule in Purple Communications.