International Society of Primerus Law Firms

NLRB Trial Judge Appears to Cut Break for Financial Industry Employee Rules

The Bennett Law Firm, P.A.
Portland, Maine/New Hampshire

Last month, National Labor Relations Board (NLRB) Administrative Law Judge (ALJ) Jeffrey Wedekind rejected the NLRB General Counsel’s contention that a Charles Schwab employee misconduct rule is too broad and thus in violation of the National Labor Relations Act (NLRA), but found that aspects of a second rule barring disrespectful conduct to be “clearly overbroad.”

The first rule that the NRLB General Counsel challenged prohibits employee misrepresentations and other misleading conduct.  The NLRB has long held that employees do not lose the protection of the NLRA by making false statements in the course of union or other protected concerted activity to improve their working conditions unless the statements are “maliciously” false.  The ALJ rejected the challenge and differentiated that line of cases by recognizing that, “none of those prior cases however, considered such rules in the context of the securities brokers and banking industries” which is subject to industry and legal regulation.

In his decision, Judge Wedekind wrote, “Given the strong interest in maintaining public confidence in the securities and banking industries, and the clearly stated and well-known obligation under federal and industry regulations not to engage in acts of misrepresentation and other misleading conduct that would undermine that interest, Schwab’s employees would not reasonably interpret the subject rule as a prohibition on protected concerted activity.”

Second, Charles Schwab maintained a rule forbidding employees from disrespectful, unprofessional or rude conduct, including from making disparaging comments about coworkers.  As we have reported in prior client e-alerts, the NLRB has repeatedly struck down rules that prohibit disrespectful conduct and disparaging comments, since such rules can be construed as an attempt to stop protected, concerted activity.  Judge Wedekind stated, “…the prohibitions in the second rule against making any disrespectful or disparaging comments are clearly overbroad under board precedent.  Those prohibitions therefore violate the act as alleged.”

The judge has ordered Charles Schwab to cease and desist maintaining the offending rule regarding disrespectful or disparaging comments, to rescind it at all locations, and to let employees know the rule is no longer active.  Schwab time to appeal has not run yet.

Careful development of employment policies is crucial even as we expect the NLRB to ease up its regulation of employers during the Trump administration.  For assistance in reviewing your policies or to get further information, please contact Peter Bennett (pbennett@thebennettlawfirm.com) or Rick Finberg (rfinberg@thebennettlawfirm.com) of The Bennett Law Firm.


The general information contained herein is intended for informational purposes only. It is not intended to be, and should not be construed as, legal advice or legal opinion on any specific facts or circumstances.

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