Retail Employers and the National Labor Relations Act


The recent trend of increasing union activity in retail and service industry workplaces makes it imperative that retailers, even those that do not have a unionized work force, understand the National Labor Relations Act (“NLRA”), and the ways the NLRA (as interpreted and enforced by the National Labor Relations Board “NLRB”) can impact an employer’s ability to protect its brand image through standard practice such as employee uniforms, severance agreements, and restricting certain activities on their premises.

Union organizing and election successes are on the rise at retail and service industry locations.  Since December of 2021, employees at nearly 300 Starbucks locations have voted to unionize. At the end of 2022, approximately 5% of all retail workers were represented by labor unions and the trend of increased unionization shows no sign of reversing.

Given this increase in unionization, it is important that retailers understand changes in NLRB precedent that could impact their business, even if they do not have a union.  Three areas of particular importance are (1) brand standards; (2) severance agreements; and (3) restricting certain non-employee activity at the worksite.

First, with regard to maintaining brand standards, a recent and important decision is Tesla, Inc., 371 NLRB No. 131 (2022), which changed the requirement for when an employer can enforce their neutral dress code policies when such policies prohibit employees from wearing union paraphernalia on t-shirts or other items.  In 2019, in a case involving Wal-Mart stores, the Board held that an employer may partially restrict employees from wearing or displaying union insignia when such insignia conflicts with a uniform required by the employer’s dress code policies.  But in Tesla, the Board reversed that decision and required employers to show “special circumstances” in order to maintain a dress code for employees that restricts employees’ ability to wear their union insignia.  This means that any employer dress code policy that interferes with employees displaying union insignia while at work is presumptively unlawful unless the employer establishes special circumstances that justify interfering with this employee right.

The General Counsel also sought to extend employee speech protection to social justice speech such as “Fight for $15” and “Black Lives Matter” messages on employees’ work attire.  In a case decided by an Administrative Law Judge last year, the General Counsel alleged that Home Depot wrongly asked an employee to remove a “Black Lives Matter” message from his uniform, based on it violating the nationwide dress code policy that prohibited displaying “causes or political messages unrelated to workplace matters” on their uniforms.  The General Counsel alleged that the “Black Lives Matter” message on the employee’s uniform was concerned activity protected by Section 7 of the NLRA.  The ALJ disagreed and the General Counsel appealed to the NLRB.  The case is currently pending before the NLRB and a decision is expected this year.

Second, in McLaren Macomb, 372 NLRB No. 58 (2023), the Board held that overly broad confidentiality, non-disclosure, and non-disparagement clauses included in severance agreements, that can be read to limit or prohibit former employees from participating in the Board’s unfair labor practice investigations, are unlawful.  If you use severance agreements with your employees covered by the Act, generally lower-level, non-supervisor and non-managerial employees, these agreements may be affected by this decision.  The decision, and subsequent General Counsel memo addressing the case, suggested that the Board will look to further limit what employers can include in severance agreements such as restrictions on employees’ participation in Board proceedings or exercise rights protected under Section 7 of the Act.

Third, in Bexar County Performing Arts Center, 372 NLRB No. 28 (2022), the Board restricted a property owner’s ability to exclude employees of their contractors from access to a property where they work, but the contractor employees’ employer does not own, when off-duty to engaged in union organizing or other activity protected by Section 7 of the Act.  The Board held that a property owner can only exclude off-duty employees of its contractors from its property where the contract employees work if “the activity significantly interferes with his use of the property or where exclusion is justified by another legitimate business reason, including, but not limited to, the need to maintain production and discipline.”

With this recent slate of changes to the Board’s interpretation of the NLRA, and more changes likely on the way, it is important for union and non-union retailers to keep up with the changes and adapt your operations to this new environment.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.


About the Author: Matthew A. Fontana

Matthew Fontana represents management in employment and labor matters.


About the Author: Sarah C. Blackadar

Sarah Blackadar draws on a deep breadth of government experience to assist clients with their labor and employment needs. She counsels clients in their negotiations with labor unions, collective bargaining and contract administration. Sarah offers guidance in National Labor Relations Board (NLRB) proceedings, labor-relations lawsuits, arbitration hearings and other administrative proceedings.

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