On November 14, 2023, the Fifth Circuit Court of Appeals slapped down the National Labor Relations Board for their 2022 decision against Tesla. What issue drew the ire of the Court of Appeals? Workplace apparel.

No, casual Fridays did not cause the fuss. Instead, important issues of employer control confronted the court. The decision highlights one current conflict between the federal courts and the National Labor Relations Board (the Board). Will the U.S. Supreme Court enter the fray? Employers facing issues of possible union organizing will want to keep an eye on this case.

Tesla’s Policy

Tesla’s policy seemed straightforward enough as far as the company was concerned. Employees were permitted to wear union buttons that were stickers on their work uniforms during working time and working hours. What employees were prohibited from doing was wearing union T-shirts in the workplace. Thus, the policy did not prohibit showings of union support, but it did limit the apparel choices and the means of displaying that union support by preventing UAW T-shirts. The company's policy was neutral in that it also did not permit pro company T-shirts to be worn in the place of working apparel.

The reason for Tesla 's policy sprang from a requirement that uniforms be worn to minimize the risk of damage to vehicles through the production process. When employees wore union T-shirts, instead of their company-issued attire, the individuals violated the uniform policy and were threatened with being sent home.

In response, the UAW filed an unfair labor practice charge with the National Labor Relations Board. The matter then was litigated through the National Labor Relations Board process.

The Board Decision

The Biden-majority Board agreed completely with the union position. The Board reversed existing precedent and reinvoked a decision from 1945 which found that any interference with the employees’ right to display union insignia violates the National Labor Relations Act. According to the Board, the employer carries the burden of showing a “special circumstance” which justifies any interference in the employee's right to display union insignia. Tesla appealed the decision, pointing out that the Board's decision effectively made all company uniforms presumptively unlawful.

The Fifth Circuit Begs to Differ with the Board

The Fifth Circuit Court of Appeals sided with Tesla and determined that the Board possesses no authority to make all company uniforms presumptively unlawful. Here, the Tesla “uniform” constituted of nothing more than black T-shirts and black sweaters with the Tesla name and logo, albeit with apparently soft and gentle material. The company referred to these as “Team Wear”. The company allowed substitutions for Team Wear if approved by a supervisor. However, any such alternative clothing must be “mutilation free” and work appropriate, with no safety risks involved. (The production process left the new cars vulnerable to damage while the paint finish completed curing.)

Tesla initially allowed the UAW T-shirts to be worn but began discovering vehicle damage on the production line. At that time the company changed the policy and prohibited the T-shirts but allowed UAW stickers to be worn on the Team Wear, prompting the UAW to file its unfair labor practice charge.

Tesla justified its change in policy on two grounds. First, the new policy minimized the risk of mutilation to the vehicles. Second, the policy allowed management to visually distinguish different types of employees based on shirt color, and to confirm the absence of non-employees in the production areas.

At the outset, the court noted that it must give deference to the Board’s statutory authority. However, it was not required to give deference to the Board's interpretation of U.S. Supreme Court rulings. In other words, the Board must be kept within reasonable bounds and the court would not abdicate its obligation to carry out conventional judicial functions.

The court went on to rule that the Board had not provided a rational decision consistent with the purposes of the National Labor Relations Act. It found that the Board had incorrectly applied the 1945 U.S. Supreme Court decision upon which it had relied, and that the law requires a balancing test concerning employer uniform policies. Specifically, the right of self-organization must be balanced with the right of employers to maintain discipline and control in their establishments.

Here, the court concluded that it will not enforce a prohibition on policies like those of Tesla, e.g., a non-discriminatory rule under which employees are permitted to adorn their company uniform with union insignia. The court chastised the Board for showing a complete lack of balance in their analysis of the uniform rule. The court declared it is beyond the statutory authority of the Board to declare all uniforms and dress codes presumptively unlawful and subject to a special circumstances test.

Conclusion

The situation continues to evolve, and the Tesla ruling applies only to the Fifth Circuit. All other circuits remain bound by the Board decision until such time as the U.S. Supreme Court rules on the issue. Wise employers will tread carefully and stay in contact with their legal counsel to be sure that they act in a manner consistent with the law in their jurisdiction.

If you have questions, please contact David J. Carr or another member of the Workplace Solutions Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.