NLRB Invalidates Conflict of Interest Rule

The National Labor Relations found an employer’s conflict of interest rule invalid on its face in The Sheraton Anchorage, 362 NLRB No. 123 (June 18, 2015). In its employee handbook, the employer maintained a rule providing: “I understand that conflict of interest with the hotel or company is not permitted.” The rule was immediately adjacent to a rule stating: “I understand that it is against company policy to have an economic, social or family relationship with someone that I supervise or who supervises me and I agree to report such relationships.” In finding the conflict of interest rule facially invalid, the Board majority, consisting of Chairman Pearce and Member Hiozawa, concluded:

that employees would reasonably interpret the rule prohibiting them from having a “conflict of interest” with the Respondent as encompassing activities protected by the Act. Particularly when viewed in the context of the Respondent’s other unlawfully overbroad rules, employees would reasonably fear that the rule prohibits any conduct the Respondent may consider to be detrimental to its image or reputation or to present a “conflict” with its interests, such as informational picketing, strikes, or other economic pressure.

Member Miscimarra dissented. Although finding that the employer unlawfully applied the conflict of interest rule to discipline nine employees for presenting a boycott, Member Miscimarra did not find the rule unlawful on its face, especially when the rule is given context by an adjacent rule:

Employers have a legitimate interest in preventing employees from maintaining a conflict of interest, whether they compete directly against the employer, exploit sensitive employer information for personal gain, or have a fiduciary interest that runs counter to the employer’s enterprise. Therefore, even if one applies Lutheran Heritage Village-Livonia, 343 NLRB 646, 646 (2004), I do not agree with my colleagues’ conclusion that employees would reasonably understand the conflict-of-interest rule as one that extends to employees’ efforts to unionize or improve their terms or conditions of employment.