La-Z-Boy class action lawsuit: Indiana dealer settles with the NLRB

A La-Z-Boy dealership in Indiana will rescind three work rules that the National Labor Relations Board (NLRB) alleged unlawfully infringe on employees’ rights under US labor law. The NLRB has increased its review of workplace rules following its Stericycle decision, using a new standard set in that ruling.

The agreement settles a complaint by two employees terminated in 2022, who claimed that La-Z-Boy maintained an unlawful work rule prohibiting workers from discussing wages, hours and working conditions. Such rules violate National Labor Relations Act (NLRA) provisions that guarantee employees the right to engage in collective activities for the purpose of collective bargaining or other mutual aid and protection.

Other rules in the dealership’s employee handbook prohibited employees from any personal use of the company’s email and computer systems and from making any unauthorized use of the company name, logo, slogans or other trademarks. The terminated employees also alleged that the employer acted in retaliation for the employee’s protected activity.

In a hearing before an administrative law judge, the owner of the La-Z-Boy dealership denied any violation of the NLRA, arguing that a reasonable reading of the rules would not have any “chilling effect” on employees’ exercise of their NLRA rights and claiming that the employees had been fired for direct insubordination of the owner.

In the settlement, the La-Z-Boy dealership agreed to:

• Rescind the unlawfully maintained rules.
• Cease any retaliatory actions for protected activity.
• Provide back pay to the terminated employees, as well as front pay in lieu of reinstatement, totaling $279,822.
• Issue a letter of apology to the terminated employees and remove all references to termination from their employment files.
• Mail a copy of the settlement notice to all current and former employees who had worked at the store at the time of the dispute.

In addition to the make-whole damages payment, one of the terminated employees will also receive consequential damages of just over $17,500, bringing the total payments to nearly $300,000. Consequential damages are compensation for direct or foreseeable pecuniary harm suffered by an employee because of their discharge. The current NLRB General Counsel has issued guidance instructing the regional offices to “always make sure to seek compensation for any and all damages, direct and consequential, attributable to an unfair labor practice.”

The NLRB has indicated its intention to diligently review workplace rules under the more employee-friendly Stericycle standard. Employers should take appropriate action to ensure that workplace rules do not impinge on employees’ NLRB rights.