The National Labor Relations Board (NLRB) issued a controversial decision last year significantly limiting a company’s ability to implement and enforce uniform and dress code policies. In Tesla, Inc., 317 NLRB No. 131 (2022), the NLRB said Tesla could not prohibit employees from wearing pro-union shirts at work absent “special circumstances” justifying the prohibition. The Board reached its decision even though Tesla’s dress code policy was content-neutral (requiring only that employees wear Tesla-issued shirts) and even though employees could still display union insignia at work through other means.
Earlier this month, however, the 5th U.S. Circuit Court of Appeals reversed the Board, finding it failed to properly balance Tesla’s right to maintain certain work rules against its employees’ right to support a union. The 5th Circuit also found that the Board exceeded its authority by declaring all uniform and dress code policies presumptively unlawful.
Tesla’s Uniform Policy
Tesla required its production associates to wear “Team Wear” – a black shirt or sweater with the Tesla name and logo – to minimize damage to a vehicle’s paint during the production process. In 2017, as part of union organizing efforts, Tesla production associates began wearing United Autoworkers Union (UAW) shirts rather than Team Wear. Tesla permitted this for several months, but after discovering damage to the paint on several vehicles, began strictly enforcing the Team Wear policy and instructed employees that they could not wear union shirts at work. Tesla still allowed employees to affix union stickers to their Team Wear.
The UAW filed a charge against Tesla at the NLRB, alleging that enforcement of the Team Wear policy violated the National Labor Relations Act (“the Act”), which gives employees the statutory right under Section 7 to express their views about unionization and working conditions, including by wearing union insignia at work.
The Board’s Decision
Relying heavily on Supreme Court precedent in Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945), the Board held that if an employer’s dress code policy in any way interfered with an employees’ statutory right to display union insignia at work, the employer’s policy was subject to strict scrutiny and the employer would be required to prove special circumstances for maintaining the policy. The Board explained that employers could not avoid the “special circumstances” test through neutral dress code or uniform policies like Tesla’s because such policies effectively disallowed the wearing of union clothing. The Board held that Tesla’s justifications for the policy – to minimize damage to vehicles and to allow visual management of employees – did not satisfy the special circumstances test, and therefore it violated the Act. Tesla appealed the Board’s decision to the 5th Circuit.
The 5th Circuit Decision
The unanimous three-judge panel at the 5th Circuit ruled that the special circumstances test should not apply to a neutral dress code policy like Tesla’s, which contained a restriction rather than a prohibition on the display of union insignia. The court instead endorsed the 2019 Board decision inWal-Mart Stores Inc., 368 NLRB No. 146 (which the Board overruled in the 2022 Tesla decision) for the principle that an employer can limit the size and appearance of union insignia without proving special circumstances because such limitations are a less severe restriction on Section 7 rights.
“If the Board subjects every infringement to a special-circumstances test, it cannot adjust the level of scrutiny when it considers comparatively lesser or greater infringements — instead, the Board scrutinizes every infringement as strictly as the next,” the opinion states. “For there to be balance, some infringements must be subject to lesser scrutiny than are others.”
Applying this test, the 5th Circuit held that Tesla’s Team Wear policy was lawful because it advanced a legitimate company interest in a non-discriminatory manner while still allowing employees to exercise their Section 7 right to display insignia in other ways (i.e., through stickers on their Team Wear). The Board “elevated employee interests at the expense of legitimate employer interests,” the judges held.
While the court based its ruling primarily on the lack of balance shown by the Board’s rule, it also concluded that the Board exceeded its statutory authority in crafting such an extremely broad rule that would render all company uniforms presumptively unlawful and likely was not Congress’s intent.
Employer Takeaways
While the 5th Circuit’s decision is a welcome reprieve for employers from the barrage of negative labor decisions of late, employers must still be cognizant of an employee’s statutory right to display union insignia at work and craft dress code and uniform policies accordingly.
It must also be noted that the 5th Circuit decision is only binding in the 5th Circuit (which includes Louisiana, Mississippi and Texas) because of the Board’s “nonacquiescence” policy, under which it applies its own rulings even in the face of contrary circuit court decisions and will continue to do so unless and until the Supreme Court rules on the issue. Further, the court advocated for a return to the standard in Wal-Mart, which relies on a now-outdated framework for evaluating work rules (for more on the Board’s recent change to the work rules standard, click here to read our analysis.) Nevertheless, the 5th Circuit’s decision gives hope to employers outside the jurisdiction, that if faced with the same allegations, other circuit courts would similarly rule in their favor.
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