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NLRB Pans Tesla Media Contact Provision, Threatening CEO Tweet on Stock Options, Termination and Other Employment Actions
Practical Law Legal Update w-030-3749 (Approx. 5 pages)
NLRB Pans Tesla Media Contact Provision, Threatening CEO Tweet on Stock Options, Termination and Other Employment Actions
by Practical Law Labor & Employment
| Law stated as of 02 Aug 2023 • USA (National/Federal) |
In Tesla, Inc., the National Labor Relations Board (NLRB) held that a rule prohibiting employees from communicating with the media regardless of whether the communications concern confidential information or the employees purport to speak on the employer’s behalf, violated Section 8(a)(1) of the National Labor Relations Act (NLRA). The NLRB also ordered a remedy for an unlawful personal tweet and scrutinized a business-use restriction on HR software.
NOTE: See the UPDATE at the end of this resource for subsequent developments affecting this decision.
On March 25, 2021, in Tesla, Inc., the panel (Board) heading the NLRB's judicial functions, among other actions:
- Held that the employer violated Section 8(a)(1) of the NLRA by maintaining an overbroad media contact provision in its confidentiality agreement that generally instructed employees: "regardless of whether information has already been made public, it is never OK to communicate with the media or someone closely related to the media about Tesla, unless you have been specifically authorized in writing to do so." The Board majority (Chairman McFerran and Member Ring) placed rules prohibiting employees from communicating with the media regardless of whether the communications concern confidential information or the employees purport to speak on the employer’s behalf in Boeing Category 3. The employer had justifications for a confidentiality rule but the media contact provision's impact on employees' Section 7 rights to communicate with the media concerning labor disputes and employment terms exceeded those justifications, because employees would not reasonably:
- understand this provision as limiting communications solely about confidential information because it prohibited sharing information defined more broadly than what was defined as "confidential" information;
- understand the provision as limiting employees from speaking as the employer's spokesperson; or
- interpret the media contact rule as not applying to Section 7 activity because a vague disclaimer that the rule prohibits media contact "unless [that contact is] otherwise allowed by law" was not a sufficient savings clause (see Maine Coast Reg'l Health Facilities, 369 N.L.R.B. No. 51 (Mar. 30, 2020)).
- Held that the employer unlawfully imposed restrictions on employees' non-business use of a third-party HR software program, Workday, and disciplined employees under those restrictions directly in response to employees using it to engage in protected communications without showing that the rule was adopted to maintain production or discipline.
- Ordered that the employer:
- direct CEO Elon Musk to delete an unlawful May 20, 2018 tweet (stating that employees at a Fremont, California facility would lose their stock options if they chose union representation) from the personal @elonmusk Twitter account; and
- conduct a nationwide notice posting concerning this ULP for all US-based employees to see because the unlawful tweet was visible to 22,700,000 Twitter followers and then republished and disseminated "via Twitter, Facebook, radio, television, newspapers, news media, and various other print and social media platforms."
- Held that the employer engaged in an unlawful termination, unlawful interrogations, and other unlawful discipline, but did not unlawfully solicit grievances in response to union activity.
The Board's decision in Tesla provides additional clarity regarding how employers should tailor the scope of their media contact rules to render them lawful under the NLRA. The Board placed rules prohibiting employees from communicating with the media regardless of whether the communications concern confidential information or the employees purport to speak on the employer’s behalf in Boeing Category 3. The decision also highlights that employers providing employees access to company electronic communications systems, intranets, or software should set terms of use, such as limiting use to business purposes, well-before employees use it for union activity. Employers should consider the Board's analysis when drafting or reviewing these policies.
UPDATE
On March 31, 2023, the Fifth Circuit granted enforcement of the Board's order, upholding the Board's finding that Elon Musk's May 2018 tweet constituted an implied threat to rescind employee stock options in retaliation for unionization and order to delete the tweet. The court concluded that the statement was not an expression of argument or opinion protected under Section 8(c) and that subsequent tweets and communications in which Musk stated his belief that the union (rather than the company) would seek to eliminate employee stock options did not alter the coercive nature of the original tweet. (Tesla, Inc. v. NLRB, (5th Cir. Mar. 31, 2023).)
UPDATE
On August 2, 2023, a Board majority adopted a new burden-shifting standard for evaluating facial challenges to employer work rules that do not expressly restrict employees' protected concerted activity under Section 7 of the NLRA, overruling Boeing and the subsequent work rules decisions applying the categorical classification system articulated therein (Stericycle, Inc., 372 N.L.R.B. No. 113 (Aug. 2, 2023); for more information on this decision, see Article, The NLRB's New, Developing Standard for Assessing Lawfulness of Work Rules).