Vice President, Labor Policy, U.S. Chamber of Commerce
November 28, 2023
On November 14, the Fifth Circuit Court of Appeals ruled against a decision by the National Labor Relations Board (NLRB) that had declared that a uniform policy at Tesla, the electric vehicle manufacturer, violated the rights of its employees to wear union insignia. The court’s ruling puts a damper on the NLRB’s lopsided stance in favor of labor unions in recent years and offers some hope for employers that have neutral, non-discriminatory dress codes.
The case began in 2017, when some employees of Tesla started wearing black shirts with the logo of the United Auto Workers (UAW) union instead of company-provided black shirts with the Tesla logo, which the company required to prevent damage to vehicles while emerging from production and to facilitate visual management of its production facility.
Notwithstanding that policy, Tesla initially allowed the UAW shirts, but after a few months it discovered an increase in “mutilations” of vehicles coming out of its assembly line. Tesla then began to strictly enforce the uniform policy, prompting the UAW to file an unfair labor practice charge alleging the policy interfered with employees’ right to display union insignia.
In 2019, an administrative law judge (ALJ) ruled in favor of the UAW applying the “special circumstances” test derived from a 1945 Supreme Court case called Republic Aviation Corp.that requires employers to justify any restriction on union insignia by showing that it is necessary to maintain production or discipline.
Tesla appealed the ruling to the NLRB, arguing that the special circumstances test should not apply to its neutral and nondiscriminatory uniform policy, which allowed employees to display union insignia in other ways, such as stickers. However, the NLRB affirmed the decision in 2021. In doing so, the NLRB overruled a 2019 case, Wal-Mart Stores, Inc., which had held that size and appearance restrictions on union insignia were subject to a less restrictive test, and declared that “when an employer interferes in any way with its employees’ right to display union insignia, the employer must prove special circumstances that justify its interference.”
Tesla then petitioned for review by the Fifth Circuit, which vacated the NLRB’s decision in its recent ruling. The court found that the NLRB’s rule was irrational and inconsistent with the NLRA and that it failed to balance the employer’s and the employees’ interests. The court noted that Tesla’s uniform policy was content-neutral, nondiscriminatory, and did not prohibit union insignia, but only restricted the type of clothing that could be worn. The court also distinguished the facts of the case from those of Republic Aviation and other precedents, which involved complete bans on union insignia or solicitation. The court concluded that the NLRB had exceeded its statutory authority and had not followed the Supreme Court’s guidance on striking a reasonable accommodation between conflicting rights.
The Fifth Circuit’s ruling is a setback for the UAW, which has been trying to organize Tesla’s workers for years. It also has implications for other employers that have uniform policies or dress codes that may affect the display of union insignia. Emphasizing that such policies are not presumptively unlawful, the court ruled that the NLRB must consider the employer’s legitimate interests and the employees’ alternative means of exercising their rights.
The court’s decision also restores the precedent of Wal-Mart Stores, Inc., which had provided a more flexible test for size and appearance restrictions on union insignia. The ruling may also encourage other courts to review the NLRB’s decisions more closely and to ensure that the NLRB does not usurp major policy decisions that should be made by Congress—not pro-union advocates.