On July 3, 2017, the U.S. Court of Appeals for the Eighth Circuit, sitting en banc, rejected the reasoning of an ALJ, the NLRB, and a panel of the Eighth Circuit regarding whether Jimmy John’s employees could hang posters at work challenging the company’s sick-leave policy.

The sandwich-shop franchisor’s sick-leave policy prohibited employees from merely “calling in sick.”  Instead, the company required employees absent from a shift to find a replacement worker.  International Workers of the World (“IWW”), a trade union attempting to unionize the workers, designed and hung posters in the stores implying that as a result of this policy the sandwiches posed a health risk to customers.  Managers quickly removed the posters, and IWW supporters plastered Minneapolis-St. Paul with replicas of the posters.

As a result, the company fired six employees who coordinated the attack and issued written warnings to three who assisted.

The Board’s ALJ and a divided of panel of the Board concluded that the company violated Sections 8(a)(1) and 8(a)(3) of the NLRA because (1) the posters were part of and related to an ongoing labor dispute, and (2) they were not “so disloyal, reckless, or maliciously untrue as to lose the Act’s protections.”  See MikLin Enterprises, Inc., 361 N.L.R.B. No. 27 (Aug. 21, 2014) (citing NLRB v. Electrical Workers Local 1229 (Jefferson Standard), 346 U.S. 464 (1953)).  The Jefferson Standard principle generally explains that communications lose Section 7 protection when they constitute a “sharp, public, disparaging attack upon the quality of the company’s product and its business policies.”

The full Eighth Circuit disagreed with the Board.  See MikLin Enterprises, Inc. v. NLRB, No. 14-3099 (8th Cir. July 3, 2017).  First, the Court held that Jefferson Standard applies to employees’ disparaging communications even when they expressly reference ongoing labor disputes.  In this regard, the Court disagreed with the contrary conclusion of the panel majority in DirecTV, Inc. v. NLRB, 837 F.3d 25, 35–36 (D.C. Cir. 2016).

Second, the Court concluded that the Board fundamentally misconstrued Jefferson Standard.  For example, the Board failed to recognize that the Jefferson Standard principle includes not only the subjective consideration of the employee’s intent to harm the company through a “sharp, public, disparaging attack,” but also an objective component that focuses on the means used to achieve the employee’s purpose.  Moreover, the Board disregarded the manner in which and the extent to which the communications harmed the company, focusing entirely instead on whether the employees were motivated by a sincere desire to improve their terms and conditions of employment.

Ultimately, the Court explained that an employee’s disloyal statements can lose Section 7 protection without a showing of actual malice.  The Eighth Circuit noted that the poster campaign was designed to inflict harm on the company’s reputation and reduce its income.  To do so, the employees made materially false and misleading statements, and the harm caused by the employees’ actions far outlasted the labor dispute at issue.

The Court upheld other aspects of the Board’s Order.  For example, the Court held that an assistant manager’s Facebook posts which encouraged employees to harass an IWW supporter for his Section-7-protected activities violated the NLRA.  Likewise, the Court affirmed the Board’s decision that the company was not permitted to remove from back-room bulletin boards the IWW’s postings about the recent IWW election and subsequent unfair labor practice charges.  The Court upheld the decision that these practices violated Section 8(a)(1).

This opinion gives some solace to employers facing campaign-related activity designed to harm the business.  Notably, however, the circuits are split on the extent to which Jefferson Standard may apply to campaign-related activity.  Accordingly, as we urged when we reported on the Board decision in 2014, employers should tread carefully and consult counsel before issuing discipline in response to employee communications.