Eighth Circuit Upholds Employer Rights and Reaffirms that Employee Disloyalty Is Not Protected by the National Labor Relations Act

August 2017

Last month, the U.S. Court of Appeals for the Eighth Circuit in St. Louis issued an opinion reinforcing that, contrary to numerous recent decisions of the National Labor Relations Board (NLRB), employee conduct in the workplace that is ostensibly “concerted” activity under the National Labor Relations Act (NLRA) might nonetheless not be protected by law. In MikLin Enterprises, Inc. v. National Labor Relations Board, the Eighth Circuit reanimated longstanding but rarely used precedent to hold that employees may forfeit the protections of the NLRA when acting in a disloyal way toward their employer. In MikLin, employees of a sandwich shop chain, in an attempt to obtain paid sick days, hung posters, issued press releases, and wrote an open letter to the sandwich shops’ owners to try to convince customers that eating at the sandwich shop could make them sick due to the lack of paid sick days. Reversing the decision of the NLRB, which found the employees’ conduct to be protected under the NLRA, the Eighth Circuit affirmed the employer’s right to terminate the employees for extreme, public disloyalty that was intended to harm the employer’s reputation and business.

In doing so, the Eighth Circuit breathed new life into a 1953 U.S. Supreme Court decision, National Labor Relations Board v. Local Union No. 1229, International Brotherhood of Electrical Workers, which recognized that disloyalty is not covered by the NLRA’s protection of concerted employee activity. The Supreme Court held that a broadcasting station did not violate the NLRA by terminating its employees who distributed handbills attacking the broadcasting station’s “product and its business policies, in a manner reasonably calculated to harm the company’s reputation and reduce its income.” The Supreme Court stated: “There is no more elemental cause for discharge of an employee than disloyalty to his employer.”

The Eighth Circuit in MikLin applied this disloyalty standard to the sandwich shop employees, explaining that allegations claiming that a restaurant is selling unsafe food are the equivalent of a “nuclear bomb” in a labor-relations dispute. The Court noted that the sandwich shop employees even waited until flu season to mount their campaign, when they believed that their message would be most effective. The Court also reasoned that these disloyal acts were unlikely to assist with (and would likely outlive) the labor dispute, to the sandwich shops’ enduring detriment.

The Eighth Circuit also found disloyalty because the employees’ public claims were materially false and misleading. The employees’ posters stated that employees were not permitted to call in sick (and thus had to work while ill). In actuality, the sandwich shops required all employees to call in sick if they had experienced any flu-like symptoms in the last 24 hours, as required by state law. The press release and open letter authored by the employees claimed that the sandwich shops jeopardized customers’ health by the supposed daily health code violations. In reality, the sandwich shop chain had served more than six million sandwiches over its 10-year existence, with only two investigations by the state Department of Health, both of which found overall compliance with the food code requirements and no critical violations.

The disloyalty standard is, as noted by the MikLin court, notoriously difficult to apply. However, as the MikLin court held, calculated public attacks by employees on an employer’s product and reputation can, and sometimes do, cross the line between protected labor-relations dispute and unprotected employee disloyalty. Going forward, application of the MikLin decision and any resulting legal challenges will further clarify the limits of protected employee activity, lending employers greater protection from “nuclear bombs.”