Still no standard on whether off-duty profanity toward your boss is protected

Russ Samson Iowa Employment & Labor Law Dickinson Law Firm Des Moines Iowa

Posted on 06/26/2014 at 08:16 AM by Russell Samson

On June 16, 2014, in Starbucks Corporation, 360 NLRB No. 134 the National Labor Relations Board (NLRB) held that an employer unlawfully interfered with an employee's Section 7 rights under the National Labor Relations Act (NLRA)  when it terminated his employment following an obscenity-laced off-duty outburst directed at a supervisory employee in front of customers.

At first blush, the result may seem disturbing to employers. A deeper look makes it less surprising and more of a cautionary tale. Procedurally, the Starbucks Corp. case was first decided in the employee's favor in October 2009 by the only two members of the NLRB who were still in office then – Wilma Liebman and Peter Schaumber. Schaumber adopted the ALJ's use of a balancing test from the 1979 Atlantic Steel case and both he and Liebman concluded the termination was unlawful. Liebman reached her conclusion agreeing with Schaumber, and noting it was unlawful under an alternative Wright Line analysis. The 2009 Starbucks Corp. decision was later invalidated, not on its merits, but after the U.S. Supreme Court held in 2010 that for the NLRB to perform statutory functions, it needed at least three members. (See New Process Steel v. NLRB.) The 2009 Starbucks Corp. decision was later reconsidered and affirmed in August 2010 by a three-member panel. That panel was composed of the two who had originally decided it, plus Member Brian Hayes, who agreed with Schaumber's approach. Both sides then appealed the panel's ruling to the Second Circuit Court of Appeals. That court refused to enforce the part of the NLRB's order regarding the termination. The majority of the Second Circuit held that the NLRB improperly disregarded the entirely legitimate concern of an employer not to tolerate employee outbursts containing obscenities in the presence of customers, and held that the decades old Atlantic Steel standard developed for workplace outbursts didn't apply. NLRB v. Starbucks Corporation, 679 F.3d 70 (2012). The majority remanded the case back to the Board with this guidance:

Now that the Board is advised that its Atlantic Steel four-factor test is not applicable to determining section 7 protection for an employee who, while discussing employment issues, utters obscenities in the presence of customers, we think the Board should have the opportunity in the first instance to consider what standard it will apply in that context. Whether it will deny protection to any person who in fact is an employee or only to persons whom the employer reasonably believes customers would reasonably perceive to be an employee, or will develop some other formulation remains to be seen. We simply leave such matters for the Board's consideration in the first instance.

In a separate concurring opinion, a Second Circuit judge expressed some concerns about the majority's determination that Atlantic Steel would never apply to cases of swearing at management in front of customers. Nevertheless, he said:

I certainly agree that an employee's use of profanity on store premises in front of customers constitutes serious misconduct, and that an employer may legitimately discipline an employee who engages in such conduct. Indeed, when an outburst takes place in front of customers on store premises, the Board may reasonably conclude that this factor weighs so heavily against protection as to prove essentially dispositive in certain cases.

But he concluded that he agreed with the, 'decision to remand and allow the NLRB to consider in the first instance the appropriate standard for the customer context and, if necessary, find the additional relevant facts.' Especially in light of some of the criticism (discussed below) of the views of the current NLRB majority toward profanity and insubordinate conduct, I was curious to learn what kind of 'standards' the NLRB might develop for such activity 'in public.' So when I learned that the Board had issued its decision following the remand of Starbucks Corp., my curiosity was piqued. In reading the opening paragraphs -- where the Board stated that it had determined the termination violated the Act 'even assuming [the individual's] conduct lost the protection of the Act' – I was hooked. What had the Board determined were the new standards to be applied when an employee engages in profanity on store premises in front of customers? Unfortunately, we don't know. Notwithstanding the guidance of the appellate judges about what to do with this case on remand, the Board did not provide any standards for the future as to when an employee may or may not engage in profanity on store premises in front of customers. Rather, the NLRB re-evaluated the merits of the employment termination in the Starbucks Corp. case using the Wright Line burden shifting framework applicable to Section 8(a)(3) cases since the 1980's. See also, NLRB v. Transportation Management Corp., 462 U.S. 393 (1983) (explaining and approving the Wright Line standard). This alternative approach had been signaled as a reason to affirm the termination by then-Chair Liebman in the initial 2009 opinion. Under Wright Line, the General Counsel of the NLRB must first show by a preponderance of the evidence that the protected activity at issue was a motivating factor in the employer's adverse action. If this is established, then the burden shifts to the employer to show that it would have taken the same adverse action even in the absence of the protected activity. Applying the Wright Line burdens to the facts underlying the Starbucks Corp. case brings the result into clearer focus. First, the NLRB in 2014 affirmed earlier determinations that Starbucks had committed a series of unfair labor practices in its efforts to keep a union out of the facility in question  i.e., the termination of one employee following an obscenity incident was not something that happened in isolation. This was evidence of anti-union animus. In addition, on the employee's termination form, Starbuck's management stated that he was not eligible for rehire, in part, because he, 'strongly support[s] the . . . union.' Thus, the NLRB determined as 'met' the Wright Line initial burden of showing that a motivating factor in the termination decision was the individual's activity in support of the union. Starbucks was unable to show that it would have fired the 'foul-mouthed' employee even in the absence of his support of the union. There was evidence that other employees had, in the past, engaged in 'similar or worse misconduct' without being fired. Examples included employees on duty who were only given warnings for cursing and yelling in front of customers. In addition, the specific incident in Starbucks Corp. involved two off-duty employees who were swearing – the employee who was terminated and a manager from another store who was a 'customer' at the time. Both of these employees were found to have been 'sp[eaking] loudly, us[ing] hand gestures and obscenities,' but, as the Board observed, '[t]here is no evidence that [the managerial employee] received any discipline.' While the judges on the Second Circuit may have believed, in the abstract, that an employee's use of profanity on store premises in front of customers constitutes 'serious misconduct' for which an employer may discipline an employee, apparently Starbucks itself did not take that view prior to this incident. And even if Starbucks' view had changed, in this particular incident it only disciplined the 'strong union supporter,' not the managerial employee. I was prepared to launch an attack of this decision, until I dug beyond the headlines. In the end, beyond cavil the NLRB had no need to develop new factors for employees who swear in front of customers. (The United States Supreme Court also avoids deciding complex questions if there is some other, lesser basis for a decision.) As the U.S. Supreme Court just decided on June 19, 2014, in the Lane vs. Franks First Amendment case, both government and private employers need a 'significant degree of control over their employees' words and actions.' However, I suggest that the lesson from Starbucks Corp. is that employers set standards for workplace conduct by their own words and deeds and also in carefully written and legally-reviewed policies and these must be consistently applied and enforced or employers will trip over themselves. The employment of the individual in this case was terminated in December 2005. The NLRB's remedial order requires Starbucks to make the individual 'whole for any loss of earnings and other benefits suffered as a result of the unlawful discrimination' including compensating him 'for the adverse tax consequences, if any, of receiving a lump-sum backpay award, and file a report with the Social Security Administration allocating the backpay award to the appropriate calendar quarters.' Nine years of backpay, with a partial gross-up, is a tough way to learn this lesson. As a side note, the Atlantic Steel factors are apparently alive and well for employee swearing that does not take place in front of customers, as demonstrated by a May 28, 2014, decision of the NLRB in Plaza Auto Center, Inc., 360 NLRB No.117. (See this blog post for an analysis of that case here and here for example.)  

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

- Russ Samson


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