Now wear this: Tesla wins appeal in work uniforms dispute

A new federal appeals court ruling is good news for any employer that requires its employees to wear work uniforms.

The U.S. Court of Appeals for the Fifth Circuit ruled that the National Labor Relations Board (NLRB) crossed the line when it pronounced that any employer interference with an employee’s right to display union insignia, no matter how small, is allowed only if “special circumstances” apply.

That rule effectively makes all company uniforms presumptively unlawful, the court explained, and the NLRB simply lacked the authority to set it.

Plant employees get work uniforms

New assembly workers at Tesla’s Fremont, California, production facility get four black shirts and a sweater as part of their uniform. The clothing has Tesla’s name and logo on it. Tesla calls this clothing and accompanying pants its “Team Wear.”

Tesla required these workers to follow a policy that said they generally had to wear the assigned clothing. Supervisors could approve substitutions, but any substitution had to be “mutilation free” — meaning it didn’t have anything on it (like a metal zipper) that could damage a new vehicle.

In 2017, union organizing efforts began, and some employees started wearing black cotton UAW shirts instead of the required Team Wear.

Tesla was fine with this at first, but it started to enforce the work uniforms policy strictly after it discovered damage to vehicles being produced.

It told its employees to show up in Team Wear only, although it also allowed them to add whatever union stickers they wanted to it.

Supervisors also sometimes let workers wear plain black cotton shirts.

Tesla said it had the policy for two reasons: to minimize damage to new vehicles, and to enable “visual management” – that is, an ability to distinguish among different employees, make sure they were where they were supposed to be, and make sure only employees were present in the assembly area.

Union goes to bat

Push came to shove when the union filed unfair labor practice charges against Tesla, alleging that the Team Wear policy violated the National Labor Relations Act (NLRA).

An administrative law judge (ALJ) sided with the union, finding there were no special circumstances justifying the policy’s application.

In other words, she ruled that it was not enough for Tesla to say that the policy helped to prevent vehicle damage and keep track of employees.

Tesla objected to the application of the “special circumstances” test, noting that its work uniforms policy was neutral and that workers could still freely display union insignia on their Team Wear. But by a 3-2 vote, the NLRB upheld the ALJ’s findings.

It said that when an employer interferes in any way at all with an employee’s display of union insignia, it has the burden to show that special circumstances justify the interference. Banning clothes with union insignia is tantamount to banning just union insignia, it reasoned.

This was a bold pronouncement to make, because it effectively made all uniforms presumptively unlawful.

Appeals court: Come back to earth

On appeal, a panel of the Fifth Circuit brought the NLRB back down to earth. At issue was the NLRA’s broad ban on employer practices that “interfere with, restrain, or coerce employees in the exercise of” their rights to engage in union-related activities.

The NLRB’s authority to set the parameters of that ban is broad, the appeals court acknowledged, but does not go so far as to exceed its statutory authority.

Any rule set by the board must be “rational and consistent with the [NLRA],” the court explained.

That was not the case here, it found. Under applicable Supreme Court precedent, it said, the board must strike a balance between the right of employees to self-organize and the right of employers to maintain discipline in the workplace. The board did not properly balance these competing interests, it said.

“[I]t is well beyond the scope of the NLRA for the NLRB to declare all uniforms and dress codes presumptively unlawful and thus subject to a special-circumstances test,” the court ruled. (Emphasis in original.)

Tesla’s policy advanced a legitimate employer interest without discriminating against union communication, the court added. The NLRB’s special-circumstances rule was irrational, it found.

The court vacated the NLRB’s decision.

Two quick takeaways

First, while the NLRB has significant authority to implement the NLRA and to say what that law means, its authority is not boundless but rather can be kept in check via judicial review.

Second, while the employer prevailed here, the case is nonetheless a strong reminder of the breadth of protection that federal law affords to employees with respect to union activities.

Tesla, Inc. v. National Labor Relations Board, No. 22-60493 (5th Cir. 11/14/23).