Charitable Fundraising Could Imperil Your Company's Union-Free Status 19-October-2001The terrorists' attacks of September 11 have left all of us searching for ways to help the families of those killed and injured. Many companies have responded by sponsoring fund raisers at work to encourage employee contributions to various September 11 charities. However, before opening its doors to outside fund raisers, management needs to consider whether doing so may inadvertently make it easier for unions to also get in the door. Management generally has the rights to prohibit (1) union outsiders from trespassing, and (2) employees from soliciting support for the union during working time. However, these rights can be lost by indiscriminately opening the door to charitable fund raisers and those who solicit for other good causes. Companies that do decide to sponsor charitable fundraisers should carefully consider how such fund raising is conducted so as not to imperil these management rights. The following article discusses exactly how charitable fund raising could jeopardize a company's union-free status. This article first outlines the rules established under the National Labor Relations Act that regulate where and when solicitations for union activity may be prohibited. It then discusses the National Labor Relations Board's ("Board") rule that a company's no-solicitation rule may not be applied only to unions (while permitting other kinds of solicitations). It explains that a company that does so may be required to allow unions access to company property and/or employees to solicit for a union during working time. It then discusses the Board's "fuzzy" "beneficent act's exception," which allows limited charitable fund raising as an exception to a broad and otherwise-uniformly-enforced no-solicitation rule. And, finally, it discusses how to consider conducting charitable fund raising so as not to imperil the enforceability of the Company's no-solicitation rules. REGULATION OF SOLICITATION AND DISTRIBUTION UNDER THE NATIONAL LABOR RELATIONS ACT The Act permits companies to promulgate and enforce certain content-neutral rules that restrain where, when and how anyone may solicit the companies' employees. The permissibility of particular rules vary depending upon whether the person restrained from soliciting is an employee, the time and place where the solicitation takes place, the nature of the company's business, and whether the company's "no-solicitation" rule "discriminates against" union activity. I. Restraining Union Activity By Employees. A. Employee Solicitation. As a general matter, the Act protects the right of employees to persuade one another to form, join or assist a labor union. Employees even have the right to engage in such conduct while on Company property. For more than 50 years, however, the law has permitted employers to limit when such activity may take place, in recognition of the management's legitimate need to maintain discipline and productivity. Thus, management may promulgate and enforce written rules that prohibit employees from soliciting other employees during the "working time" (not including breaks, lunch periods or other such time) of the solicitor or solicitee. However, as a general matter, such rules must be "content neutral" and uniformly enforced against employee solicitations for any cause. Broader restrictions on when and where solicitation is prohibited can be justified by an industry's or an employer's special circumstances. For example, broader restrictions are permitted in the patient-care areas of hospitals and on the selling floors of retail establishments. B. Employee Distribution of Union Propaganda. As a general matter, the Act also protects the rights of employees to distribute union flyers and other propaganda in nonworking areas such as lunch and break rooms. However, in recognition of an employer's right to maintain order and Charitable Fundraising Could Imperil Your Company's Union-Free Status Legal Update Page 1 cleanliness in the workplace, the law permits management to maintain clearly disseminated rules prohibiting the distribution of literature in working areas, even when employees are not working. However, as in the case of "nosolicitation" rules, such "no-distribution" rules must be uniformly applied and enforced. They may not "discriminate against" union activity. As with no-solicitation rules, broader restrictions on distribution of literature can be justified by special circumstances. C. Off-Duty Employee Solicitation. The Board applies special rules to off-duty employees. According to the Board, an employer may not prohibit an off-duty employee from soliciting his coworkers or distributing union propaganda in company parking lots and other exterior, nonworking areas. Thus, according to the Board, while a company may prohibit a non-employee union organizer from soliciting in the company-owned parking lot (pursuant to a content-neutral, uniformly-enforced, written rule); the company may not prohibit the same conduct by an off-duty employee. Implicit in the Board's decisions respecting off-duty employees is the premise that management's property rights are not worthy of the same protection afforded in the case of non-employee solicitation (see Section II, below). Although beyond the scope of this article, the Courts of Appeals have in recent years have begun to question that premise. II. Non-Employee Solicitation. A Company may also lawfully promulgate and enforce rules that prohibit paid union organizers (and other persons who are not employed by the Company) from trespassing to solicit support for a union. However, the Board has long held that such rules are unlawful if they "discriminate against" union organizational activity by permitting solicitations for other purposes. The Board has also held that such rules are unlawful in those extremely unusual situations where the union would otherwise not have any reasonable access to the employees they are seeking to organize. III. Rules Must Be Clearly Disseminated, Content Neutral and Uniformly Enforced. As discussed above, otherwise permissible rules against solicitation or distribution are unlawful if they "discriminate against" union activity. Thus, a rule that only prohibits solicitations to join a union is unlawful. And, even where a rule is content-neutral (in that it purports to prohibit solicitations for any purpose), the company violates the Act if it enforces the rule against persons soliciting support for a union while allowing solicitations for other purposes. Thus, a Company that has regularly allowed political candidates to solicit support on Company property violates the Act if it then excludes nonemployee union organizers. Similarly, a Company that allows employees to sell Girl Scout Cookies and Avon Products during working time violates the Act if it then prohibits employees from trying to "sell the union" to their coworkers during working time. IV. Making Exceptions for Charitable Solicitations A. The NLRB's Historical Posture. The Board has long recognized that management may lawfully permit a "small number" of "isolated beneficent acts" as exceptions to a valid no-solicitation/no-distribution rule. Thus, the Board has held that an employer's permitting of United Way representatives to solicit employees for charitable contributions on a limited number of occasions on company property does not make it unlawful for the employer to then bar union organizers from the property pursuant to the company's no-solicitation rule. Similarly, permitting employees to engage in a "small number" of isolated solicitations for company-approved charities during working time does not make it unlawful for the employer to then bar (in accordance with a valid no-solicitation rule) employees from soliciting for a union during working time. However, the exact number of such "beneficent acts" that the Board will permit is not clear. Furthermore, the Board cases seem to suggest that disparate treatment of charities and unions at or about the same time is itself unlawful regardless of the number of times that charitable contributions have been permitted. And, predictability of how the Board will rule is virtually confounded by the fact that five Board members are each presidential appointees (confirmed by the Senate), meaning that the political Charitable Fundraising Could Imperil Your Company's fb.us.7866554.04 Union-Free Status Legal Update Page 2 constitution of the Board often causes the Board to reach different results in seemingly similar cases. Thus, while a predominately Republican Board might bless a certain number "beneficent exceptions" to a no solicitation rule, a predominately Democratic Board might deem the same number of beneficent exceptions sufficient to render an otherwisevalid rule unenforceable. B. The NLRB General Counsel's Response to September 11 Fundraising. In the wake of the attack on the World Trade Center and the Pentagon, the NLRB's General Counsel appropriately anticipated public inquiries about whether company-sponsored fund raising for September 11 victims would render nosolicitation/no-distribution rules unenforceable. In response, the Board's General Counsel wrote a memorandum on September 28, 2001 advising the Regional Offices (which investigate and prosecute unfair labor practice charges) how to respond to such inquiries. Although the General Counsel reminded the Regional Offices of some of the Board's decisions construing the "beneficent acts exception" to the requirement that no-solicitation/no-distribution rules be uniformly enforced, the General Counsel's memo concluded: "The circumstances of each case presented to the Regions will undoubtedly differ and decisions can only be made pursuant to the filing of charges and thorough investigation by the Regions." C. Consequences For Not Applying a No-Solicitation Rule to Charitable Fund Raising. An employer faced with a union organizing campaign obviously wants to keep union organizers off its property. If it does so after having permitted others to repeatedly solicit on it property, the union may file a charge with the NLRB. If the Board concludes that a violation has occurred, the Board may order the employer to stop enforcing its rule against the union organizing activity, which could mean that union organizers would have the same access to the company's property and employees that the charities had been given. See Albertson's Inc., 332 N.L.R.B. No. 104 (2000)(union granted access to the exterior entrances of company stores where prior soliciting had been permitted). Moreover, even if the union never files charges, if it enlists enough support (30 percent of the eligible voters) to petition the NLRB to conduct an election, an employer election victory may be set aside on the basis of the "discriminatory" enforcement of the no-solicitation rule. That would mean that the employer would have to go through another election campaign while allowing union organizers access to the company's property. V. Practical Advice for Beneficent Non-Union Employers. A. The Board's "Fuzzy Line" Counsels Caution. Allowing outside charities to solicit on Company property -- even for the most laudable of causes -- creates a significant risk that the Board will find it unlawful to exclude union organizers pursuant to a properly written no-solicitation/nodistribution rule. In the Board's most recent case construing the beneficent act's exception, a majority of a Board panel found that an employer's rule permitting solicitations by well-known charitable groups while prohibiting solicitations by political groups and commercial groups that seek to sell goods or services unlawfully "discriminated against" unions. Consequently, the Board ordered the employer to stop removing union organizers from the outside entrances to its facilities. Albertson's Inc., 332 N.L.R.B. No. 104 (2000). In the dissenting opinion, Board Member (now Chairman) Hurtgen predicted that the Board's vague application of its beneficent act's exception would cause employers to limit charitable fundraising in the workplace: "My colleagues condemn this [employer's] nondiscriminatory policy. In their view, if an employer opens its property to groups seeking charitable contributions, that employer must open the property to unions ….. This view is contrary to the public interest. The consequence of this view is that some employers will simply close their doors to charitable groups. The public, and (more importantly) the beneficiaries of the public's largesse, would suffer. It is no answer to say that Board law has an exception for ‘a small number of isolated beneficent acts.' In the first place, the phrase is not a model of clarity, and employers will be uncertain as to the parameters of that fuzzy line. I fear that some will Charitable Fundraising Could Imperil Your Company's fb.us.7866554.04 Union-Free Status Legal Update Page 3 err on the side of caution, and will not permit any beneficent acts. We should encourage employers to be as generous as they wish with respect to allowing access for beneficent acts." (emphasis added) In light of the "fuzzy line" drawn by the Board, employers who want to preserve the enforceability of their no-solicitation rules should consider taking the following steps: Be sure that your organization's no-solicitation/no-distribution rules are content neutral and do not restrict union activity that is protected by law (See Section I, above). Conduct all fund raising through internal management representatives rather than representatives of the outside charities for which funds are being solicited. Employers may permit solicitations by management that would be prohibited by employees without running afoul of the Board's non-discrimination rules. See Beverly Enterprises-Hawaii, Inc., 326 N.L.R.B. 335 (1998)(employer may lawfully permit supervisors to campaign against union on company time while enforcing no-solicitation rule against employee solicitation in support of union). Require that employee solicitations for charitable purposes be confined to breaks, lunch periods and other non-working times. The Board's beneficent act's exception would probably permit employee solicitations during working time for a single, company-approved charity each year, provided that the work weeks during which such employee solicitations are permitted are carefully circumscribed. If an employer decides to let professional representatives from a charity solicit its employees on Company property, limit the number of such charities to one or two each year, and limit the number, duration and location of any such visits. Although no magical number leaps from the case law, a maximum aggregated solicitation by each approved charity of eight hours per year would almost surely meet the Board' beneficent act's exception. B. More Aggressive Employers May Wish to Count on the Chance that the Courts of Appeals May Refuse to Enforce a Board Order Applying the Board's Beneficent Act's Exception. Board orders are not self-enforcing. If an employer refuses to comply with a Board order, the Board must petition for enforcement with the appropriate United States Court of Appeals. And, the courts of appeals have not uniformly agreed with the Board's conclusion that permitting charitable solicitations while prohibiting union solicitations constitutes unlawful "discrimination against unions." Indeed, the Fourth, Sixth and Seventh Courts of Appeals have faulted the Board for equating the uniform application of rules that only prohibit certain kinds of solicitation (e.g., solicitations for the sale of products or services) with rules that "discriminate against" unions. Sandusky Mall Company v. National Labor Relations Board, 242 F.3d 682 (6th Cir. 2001)(citing Cleveland Real Estate Partners v. National Labor Relations Board, 95 F.3d 457 (6th Cir. 1996)); Riesbeck Food Markets v. National Labor Relations Board, 91 F.3d 132 (4th Cir. 1996); Guardian Industries Corp. v. National Labor Relations Board, 49 F.3d 317 (7th Cir. 1995). Although the Eighth Circuit, which includes Minnesota, Iowa, North and South Dakota, Missouri, Nebraska and Arkansas, has not directly addressed the arguments made in these cases, there is a powerful argument to be made that an employer may lawfully permit charitable solicitations (regardless of the number or extent of such solicitations) while prohibiting solicitations for the sale of goods or services, for political candidates or causes, and for any other purpose. In the context of an allegation that an employer's sponsoring of September 11 fundraising opened the door to union organizational activity, we think that most courts of appeals would lend a sympathetic ear to the position of the beneficent employer. 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