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Employment Law Alert: Interesting NLRB Decision Involving Sam's Club's Alleged Interference with Employees' Section 7 Rights

On May 9, the NLRB issued a decision in a case against Sam’s Club where employees alleged that the retailer had interfered with the exercise of their Section 7 rights. The decision represented a partial win for the retailer.

During an organizing campaign by the United Food and Commercial Workers union, a Sam’s Club manager told employees that they could not discuss the campaign on the sales floor, in the Company parking lot or in an outside smoking area. To the extent that this limitation applied while the employees were supposed to be actively working (i.e. on the sales floor), the ban would only be lawful if employees were prohibited from carrying on discussions on any subject matter while working. Since employees were, in fact, allowed to discuss other matters while working, this portion of the ban was found to be unlawful. As for the Company’s attempt to prohibit union discussions in the parking loot and while employees were on smoke breaks, this, too, was found to be unlawful. Simply put, the restriction was overly broad in that it attempted to restrict employees’ conversations in non-work areas and during non-working time.

The case was not a total loss for Sam’s Club, however. Another claim made by the employees was that the Company violated the NLRA by prohibiting them from replacing the employee badge lanyards provided by Sam’s Club with lanyards bearing the union’s insignia. Sam’s Club defended its ban on safety grounds, alleging that the lanyards it provided had breakaway snaps which would allow the lanyard to pull free if it became entangled in packaged items or heavy machinery. The lanyards supplied by the union did not have this same feature. The ALJ rejected Sam’s Club’s argument, and found that this ban, too, interfered with the employees’ Section 7 rights. However, the Board reversed, finding that Sam’s Club had “legitimate and substantial safety concerns” that “outweigh[ed] the minimal interference with employee rights.”

Bottom Line

This decision, while not terribly surprising given the facts, is nevertheless a good reminder of the critical importance of balancing employer’s legitimate business needs and employees’ Section 7 rights.

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